Shares of Invesco Ltd. (IVZ) soared to a new 52-week high of $36.79 at the beginning of the trading session on Dec 30. However, the stock closed the session at $36.35, which reflects a year-to-date return of 38.5%. The trading volume for the session was 1.5 million shares.
Despite the strong price appreciation, this Zacks Rank #2 (Buy) investment manager still has plenty of upside left, given its positive estimate revision over the last 60 days and the expected long-term earnings growth of 14.7%.
Invesco’s impressive performance was driven by improvement in its preliminary month-end assets under management (:AUM) for Nov 2013 and strong third-quarter 2013 results comprising a positive earnings surprise of 5.8%.
The AUM for November was $767.3 billion, up from $763.9 billion at the end of Oct 2013. The rise was aided by favorable market returns and positive long-term net flows. Going forward, with further improvement in the overall equity market, we expect asset inflows to contribute substantially to Invesco’s earnings.
On Oct 31, Invesco declared third-quarter earnings of 55 cents per share, which beat the Zacks Consensus Estimate by 3 cents. Better-than-expected results were aided by top-line growth, partially offset by higher expenses.
Moreover, Invesco delivered positive earnings surprises in 2 out of the last 4 quarters, with an average beat of 2.6%.
Invesco’s efficient capital deployment activities in the form of regular payouts and share buybacks make it an attractive pick for investors. Though the company did not repurchase shares in the reported quarter, it authorized the buyback of an additional $1.5 billion shares with no official date of expiry.
Estimate Revisions Show Potency
In the last 60 days, the Zacks Consensus Estimate for 2013 increased nearly 1% to $2.10 per share. For 2014, the Zacks Consensus Estimate advanced roughly 1% to $2.44 per share over the same time frame.
Other better-ranked investment managers worth considering include GAMCO Investors, Inc. (GBL), Waddell & Reed Financial, Inc. (WDR) and Brookfield Asset Management Inc. (BAM). All these stocks sport a Zacks Rank #1 (Strong Buy).
Read the Full Research Report on WDR
Read the Full Research Report on BAM
Read the Full Research Report on GBL
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