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Is Earnings Beat in Store for Artisan Partners (APAM) in Q2?

Zacks Equity Research

Artisan Partners Asset Management APAM is scheduled to report second-quarter 2019 results on Jul 30, after market close. The company’s revenues and earnings are likely to record year-over-year decline.

This Milwaukee, WI-based asset manager’s first-quarter 2019 earnings surpassed the Zacks Consensus Estimate primarily due to decline in expenses. However, fall in assets under management (AUM) on account of net client cash outflows acted as headwind.

The company has an impressive surprise history. It outpaced earnings estimates in three of the trailing four quarters, the average positive surprise being 1.04%.

Artisan Partners Asset Management Inc. Price and EPS Surprise

Artisan Partners Asset Management Inc. Price and EPS Surprise

Artisan Partners Asset Management Inc. price-eps-surprise | Artisan Partners Asset Management Inc. Quote

Notably, activities of the company during the second quarter were adequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings of 66 cents has been revised upward over the past 30 days. However, it indicates a fall of 13.2% from the prior-year quarter’s reported figure.

The consensus estimate for sales of $198 million implies 6.7% decline.

Why a Likely Positive Surprise?

According to our quantitative model, Artisan Partners has the right combination of the two key ingredients — positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.

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

Earnings ESP: The Earnings ESP for Artisan Partners is +0.25%.

Zacks Rank: Artisan Partners currently has a Zacks Rank #2 (Buy).

Factors to Influence Q2 Results

Overall Outflows to Affect AUM: Artisan Partners expects net outflows from the U.S. Mid-Cap Growth, U.S. Mid-Cap Value, and Non-U.S. Growth strategies to weigh on firmwide net flows. This is likely to have affected AUM growth in second quarter.

Lower AUM to Hamper Revenue Growth: Per the monthly metrics data published by Artisan Partners, its total AUM as of Jun 30, 2019, was $113.8 billion, down slightly from prior-year level. Thus, given the fall in AUM, performance fees and investment management fees are expected to decline in the second quarter.

Costs Might Increase: Artisan Partners’ investments in technology and communications along with efforts to expand operations are likely to have elevated costs in this quarter as well.

Other Stocks to Consider

Here are some other finance stocks that you may want to consider as these have the right combination of elements to post an earnings beat this quarter, per our model.

Franklin Resources, Inc. BEN is slated to release results on Jul 30. It currently has an Earnings ESP of +0.13% and flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

UMB Financial Corporation UMBF is slated to release results on Jul 30. It presently has an Earnings ESP of +0.06% and a Zacks Rank #3.

Moody's Corporation MCO has an Earnings ESP of +0.65% and carries a Zacks Rank #2 at present. The company is scheduled to release results on Jul 31.

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