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Invesco (IVZ) Q1 Earnings Beat Estimates, Revenues Down

Zacks Equity Research

Invesco IVZ reported first-quarter 2019 adjusted earnings of 56 cents per share, beating the Zacks Consensus Estimate of 52 cents. However, the figure was 16.4% below the prior-year quarter level.

Results benefited from improvement in assets under management (AUM) balance and rise in performance fees. However, lower net revenues and increase in operating expenses were the undermining factors.

On a GAAP basis, net income attributable to common shareholders for the reported quarter came in at $177.7 million or 44 cents per share, down from $253.9 million or 62 cents per share a year ago.

Revenues Fall, Expenses Rise

GAAP operating revenues were $1.21 billion, down 10.4% year over year. Also, the figure missed the Zacks Consensus Estimate of $1.24 billion. Adjusted net revenues decreased 7.4% year over year to $887.1 million.

Adjusted operating expenses were $602.8 million, up marginally from the prior-year quarter. The rise was mainly due to an increase in property, office and technology expenses.

Adjusted operating margin for the quarter was 32.0% compared with 37.3% a year ago.

AUM Improves

As of Mar 31, 2019, AUM was $954.8 billion, up2.2% year over year.Average AUM for the first quarter totaled $932.8 billion, down 1.9% from the year-ago quarter. Further, the March quarter witnessed long-term net outflows of $5.4 billion.

Share Repurchase Update

During the first quarter, Invescorepurchased 2.6 million shares for $50 million.

Offers Update on OppenheimerFunds Buyout

Invesco had announced a deal to acquire MassMutual’s asset management unit, OppenheimerFunds, Inc in October 2018. The transaction is on track to close on May 24, 2019.

Invesco and OppenheimerFunds have made significant progress toward achieving the post-close integration and targeted expense synergies of $475 million through a planned combination of middle- and back-office rationalization, location strategy and leveraging the scale of the global operating platform.

In the first quarter, Invesco incurred $34.9 million charges related to the deal. This included consulting, legal and compensation expenses related to management and personnel changes.

Our View

Invesco remains well poised to benefit from improved global investment flows, supported by a diversified footprint and product offering. While mounting expenses will likely continue to hurt the bottom line to some extent, its inorganic growth strategy will drive growth in the long run.

Invesco Ltd. Price, Consensus and EPS Surprise


Invesco Ltd. Price, Consensus and EPS Surprise | Invesco Ltd. Quote

Currently, Invesco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Investment Managers

BlackRock, Inc.’s BLK first-quarter 2019 adjusted earnings of $6.61 per share surpassed the Zacks Consensus Estimate of $6.20. However, the figure was 1.3% lower than the year-ago quarter’s number.

Blackstone BX reported first-quarter 2019 distributable earnings of 44 cents, lagging the Zacks Consensus Estimate of 52 cents. However, the figure reflects improvement from 41 cents earned in the prior-year quarter.

Cohen & Steers’ CNS first-quarter 2019 adjusted earnings came in at 58 cents per share, missing the Zacks Consensus Estimate by a penny. Also, the bottom line was 6.5% lower than the year-ago quarter figure.

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