What To Expect From WisdomTree (WETF) In Q4 Earnings?

WisdomTree Investments (NASDAQ:WETF) is scheduled to report fourth-quarter and 2017 results on Feb 2, before the market opens. Its revenues and earnings are expected to grow considerably year over year.

The company is expected to benefit from increase in revenues supported by higher assets under management (AUM) and advisory fees. However, rise in expenses due to its investments in technology, one-time tax reform charge and net outflows from currency hedged ETFs might offset the positives.

WisdomTree has a decent earnings surprise history. It surpassed earnings estimates in two of the trailing four quarters with an average positive surprise of 0.9%.

Last quarter, this New York-based exchange traded fund and product sponsor reported earnings per share of 6 cents, in line with the Zacks Consensus Estimate. The company witnessed higher revenues. Also, increase in AUM and lower expenses supported the results.

WisdomTree Investments, Inc. Price and EPS Surprise

Earnings Whispers

According to our quantitative model, we cannot conclusively predict an earnings beat for WisdomTree in the upcoming results. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen, which is not the case here as elaborated below:

(You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.)

Zacks ESP: The Earnings ESP for WisdomTree is -3.40%.

Zacks Rank: The stock carries a Zacks Rank of 3.

Further, WisdomTree’s activities during the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable over the last seven days.

Notably, per the consensus estimate, fourth-quarter earnings are projected to grow 133% year over year to 7 cents per share.

Factors at Play

Outflows Might be Recorded: WisdomTree has significant exposure to internationally hedged products, particularly major currency-hedged funds — HEDJ and DXJ — which are highly unstable. Also, dollar weakness during the quarter might result in outflows.

Expenses Likely to Remain Elevated: WisdomTree remains focused on executing strategic growth initiatives, including expansion of distribution capabilities and investment in technology. Such initiatives might have increased expenses in the fourth quarter.

Also, the company is likely to report a one-time charge in relation to the revaluation of deferred tax asset and ETF Securities acquisition.

Revenues Might Increase: WisdomTree’s revenues are likely to rise with support from higher AUM. Per the consensus estimate, AUM is expected to increase 18.4% year over year to $48.9 billion in the to-be-reported quarter. Further, the consensus estimate for advisory fees of $60 million indicates a 20% increase year over year.

The consensus estimate for overall revenues of $60.8 million indicates a 19.6% increase over the prior-year quarter.

Earnings Schedule of Other Stocks

Moelis & Company (NYSE:MC) carries a Zacks Rank of 3. It is scheduled to report results on Feb 7. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arlington Asset Investment Corp (NYSE:AI) sports a Zacks Rank #1 (Strong Buy). It will report fourth-quarter results on Feb 6.

GAIN Capital Holdings (NYSE:GCAP) is carrying a Zacks Rank of 3. It is scheduled to report results on Mar 8.

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