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What to Expect From WisdomTree (WETF) in Q1 Earnings?

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WisdomTree Investments WETF is scheduled to report first-quarter 2018 results on Apr 27, 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 and net outflows from currency hedged ETFs might offset the positives.

Notably, WisdomTree has a decent earnings surprise history. It surpassed earnings estimates in two of the trailing four quarters with an average positive surprise of 2.7%.

In the last reported quarter, this New York-based exchange traded fund and product sponsor’s reported earnings lagged the Zacks Consensus Estimate on account of higher expenses and continued outflows. However, the company witnessed higher revenues along with increase in AUM.

WisdomTree Investments, Inc. Price and EPS Surprise

WisdomTree Investments, Inc. Price and EPS Surprise | WisdomTree Investments, Inc. Quote

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 -0.94%.

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.

However, per the consensus estimate, first-quarter earnings are projected to grow 60% year over year to 8 cents.

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 first quarter.

Revenues Might Increase: WisdomTree’s revenues are likely to rise with support from higher AUM. Per the consensus estimate, AUM is expected to increase 7.9% year over year to $45.3 billion in the to-be-reported quarter.  Further, the consensus estimates for ETF advisory fees of $59 million indicates an 11.3% increase.

Further, overall revenues are projected to rise 10.4% year over year to $60.3 million.

Stocks to Consider

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around.

Medley Capital Corporation MCC is slated to release results on May 8. It has an Earnings ESP of +2.63% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LPL Financial Holdings LPLA has an Earnings ESP of +1.81% and a Zacks Rank #3. It is expected to report results on May 3.

Eaton Vance Corp. EV has an Earnings ESP of +0.84% and a Zacks Rank #3. It is expected to report results on May 23.

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