Invesco (IVZ) Beats Q3 Earnings As Revenues And AUM Rise

Invesco Ltd. (NYSE:IVZ) reported third-quarter 2017 adjusted earnings of 71 cents per share, outpacing the Zacks Consensus Estimate of 66 cents. Also, the bottom line came in 18.3% higher than the prior-year quarter.

Results were primarily supported by higher revenues and long-term net inflows. Further, the company reported a rise in assets under management (AUM). However, increase in operating expenses acted as a headwind.

On a GAAP basis, net income attributable to common shareholders came in at $267.5 million or 65 cents per share, up from $241.2 million or 58 cents per share a year ago.

Rise in Revenues More Than Offsets Higher Costs

GAAP operating revenues for the quarter were $1.34 billion, up 11.3% year over year. The figure was marginally above the Zacks Consensus Estimate of $1.33 billion. Adjusted net revenues increased 14.3% year over year to $976.6 million.

Adjusted operating expenses were $579.2 million, up 12.4% from the prior-year quarter. The rise was due to an increase in all expense components.

Adjusted operating margin for the quarter was 40.7% compared with 39.7% a year ago.

Strong AUM

As of Sep 30, 2017, AUM grew 11.9% year over year to $917.5 billion. Average AUM for the reported quarter totaled $890.8 billion, up 9.4% from the year-ago quarter. Further, the reported quarter witnessed long-term net inflows of $6.3 billion.

Our View

Invesco remains well positioned to benefit from improved global investment flows supported by a diversified footprint and product offering. The company is undertaking initiatives to transform key business support functions for boosting efficiency. Also, acquisition of Source and the ETF business of Guggenheim Partners LLC (upon closure) will drive growth.

Currently, Invesco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

The Blackstone Group L.P. (NYSE:BX) reported third-quarter 2017 economic net income of 69 cents per share, which beat the Zacks Consensus Estimate of 57 cents. Improvement in revenues largely boosted earnings. However, a rise in expenses was an undermining factor.

BlackRock, Inc. (NYSE:BLK) reported third-quarter 2017 adjusted earnings of $5.92 per share, which outpaced the Zacks Consensus Estimate of $5.59. Results benefited from improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.

Waddell & Reed Financial Inc.’s (NYSE:WDR) third-quarter 2017 earnings of 45 cents per share outpaced the Zacks Consensus Estimate of 40 cents. Higher gross sales and a decline in net outflows marginally supported the results. However, lower revenues and a rise in expenses were the undermining factors.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>