Investment Managers Queued Up For Earnings: BEN, MN, CG

Investment management, part of the broader Finance sector, has performed decently over the past several quarters. A decent performance of the equity markets in July and the S&P 500’s return of 3.11% in the third quarter of 2016 were the primary tailwinds for the industry. In fact, following the Brexit sell-off, majority of the industry participants have witnessed a notable rise in average assets under management (AUM) levels.

Continuing this trend, client asset growth is expected to be favorable in the to-be-reported quarter. Also, trading activity is projected to be quite decent.

However, recent stringent regulations have created a challenging backdrop for traditional asset managers. Also, equity markets became volatile toward the end of the quarter, raising concerns regarding future prospects of the industry as a whole.

On the other hand, per our Earnings Preview report, overall earnings for the Finance sector in third-quarter 2016 are expected to be up 14.4% year over year.

Now, let’s take a look at three investment management stocks that are scheduled to report their earnings on Oct 26.

Franklin Resources, Inc. (NYSE:BEN) is slated to announce fourth-quarter and fiscal 2016 results before the opening bell. The company’s upcoming release should exhibit higher AUM, as indicated by its AUM disclosure for Sep 2016. Further, the company’s cost-control efforts should support bottom-line growth to some extent.

However, the company is likely to record continued outflows, mainly tied with Global Fixed Income asset class.

Nonetheless, based on our proven model, we expect Franklin Resources to beat earnings estimates, as it has the combination of a Zacks Rank #3 (Hold) and Earnings ESP of +1.45%. (Read More: Franklin Resources Q4 Earnings: A Beat in the Cards?)

The Zacks Consensus Estimate for the stock has moved up by 1.5% to 69 cents over the past 30 days for the third quarter. This reflects year-over-year growth of 17.4%.

The company, however, does not boast a decent earnings surprise history. The stock has missed the Zacks Consensus Estimate in three of the trailing four quarters, recording an average negative earnings surprise of 2.66%.

Manning & Napier, Inc. (NYSE:MN) is scheduled to report third-quarter results after the market closes. It is difficult to conclusively predict an earnings beat this quarter as the company has a Zacks Rank #3 and an Earnings ESP of -5.56%.

Moreover, the Zacks Consensus Estimate has remained stable at 18 cents for the to-be-reported quarter over the past 30 days, which reflects a year-over-year decline of 15.9%.

Also, the company does not boast a decent earnings surprise history. It has delivered an average negative earnings surprise of 4.76% in the trailing four quarters.

The Carlyle Group LP (NASDAQ:CG) will also report its third-quarter numbers. The company carries a Zacks Rank #3, which when combined with an Earnings ESP of -2.70%, makes a surprise prediction difficult.

Moreover, the Zacks Consensus Estimate for the third quarter has moved downward by nearly 16% over the past 30 days to 37 cents. Nonetheless, this reflects significant year-over-year growth.

The stock outpaced the Zacks Consensus Estimate in two of the trailing four quarters, recording an average earnings surprise of 8.2%.

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Confidential from Zacks

This week, Zacks researchers have named 7 other stocks that look to break out even sooner than today's Bull of the Day. You can see these time-sensitive tickers free, and access additional trades that are not available to the public. Simply click here>>