Over the last several quarters, investment managers (part of the broader Finance sector) performed decently with some quarterly volatility. Nonetheless, this time, the trend is likely to get reversed amid a tough operating backdrop.
The S&P 500 Index ended the October-December quarter in red, having lost almost 14%. Additionally, the U.S. equity market recorded negative returns amid significant volatility. Investors’ concerns related to slowdown in global economic growth, trade war, uncertainty related to Brexit and the Fed’s stance related to future rate hikes were primary reasons for the disappointing equity market performance.
Therefore, asset managers have recorded a substantial increase in asset outflows. Thus, assets under management (AUM) are expected to record a decline in the quarter. Further, strengthening of the U.S. dollar might impact the global diversified AUM mix unfavorably.
Also, rise in operating expenses, fueled by marketing and investments in technology, might impede bottom-line growth.
Some investment managers, including BlackRock, Inc. BLK and Federated Investors, Inc. FII have already come out with their results. Both BlackRock and Federated Investors witnessed year-over-year decline in earnings.
Notably, per our Earnings Preview, overall earnings for the finance sector in the quarter are expected to be up 19.2% year over year. This compares unfavorably with the prior-quarter growth of 31.8%.
Let’s take a look at the four major investment management stocks that are slated to report on Jan 30.
Invesco IVZ is scheduled to report fourth quarter and 2018 results, before the opening bell. With a Zacks Rank #3 (Hold) and Earnings ESP of -3.11%, the chances of the company beating the Zacks Consensus Estimate in the quarter are low this time around.
(You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.)
Invesco’s AUM are expected to decline in the to-be-reported quarter. Significant volatility and corrections in equity markets resulted in substantial outflows during the fourth quarter. (Read more: Net Outflows, Volatility to Hurt Invesco's Q4 Earnings)
Notably, Invesco doesn’t have an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in only one of the trailing four quarters, as shown in the chart below:
Invesco Ltd. Price and EPS Surprise
Invesco Ltd. Price and EPS Surprise | Invesco Ltd. Quote
Franklin Resources BEN is scheduled to announce first-quarter fiscal 2019 results, before the opening bell. Weak equity markets and unfavorable foreign currency fluctuations are expected to result in lower AUM, on a sequential basis. (Read more: Weak Equity Markets to Impact Franklin’s Q1 Earnings)
Further, chances of Franklin Resources beating the Zacks Consensus Estimate are less this time as it has an Earnings ESP of 0.00% and Zacks Rank #5 (Strong Sell). Nonetheless, the company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate in three of the trailing four quarters.
Franklin Resources, Inc. Price and EPS Surprise
Franklin Resources, Inc. Price and EPS Surprise | Franklin Resources, Inc. Quote
Ameriprise Financial AMP is scheduled to report fourth quarter and 2018 results after the market closes. Based on expectations of improved advisor productivity, the Advice & Wealth Management segment is likely to record growth in assets. On cost front, operating expenses are expected to increase in the to-be-reported quarter due to advertising campaign and technology upgrades. (Read more: What’s in the Cards for Ameriprise in Q4 Earnings?)
With a Zacks Rank #3 and Earnings ESP of 0.00%, we can’t conclusively predict an earnings beat for Ameriprise this time around. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters, as shown in the chart below:
Ameriprise Financial, Inc. Price and EPS Surprise
Ameriprise Financial, Inc. Price and EPS Surprise | Ameriprise Financial, Inc. Quote
SEI Investments Company SEIC is slated to announce fourth quarter and 2018 results after market close. The company is projected to record an increase in earnings in the to-be-reported quarter while revenues are expected to decline marginally.
The Zacks Consensus Estimate for earnings of 73 cents reflects a year-over-year improvement of 25.9%. The consensus estimate for sales of $403.1 million reflects a decrease of 1.3%. With a Zacks Rank #4 (Sell) and Earnings ESP of 0.00%, chances of SEI Investments beating the Zacks Consensus Estimate are low.
SEI Investments have a decent earnings surprise history. The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters.
SEI Investments Company Price and EPS Surprise
SEI Investments Company Price and EPS Surprise | SEI Investments Company Quote
Check back later for our full write-up on earnings releases of these stocks.
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Franklin Resources, Inc. (BEN) : Free Stock Analysis Report
Invesco Ltd. (IVZ) : Free Stock Analysis Report
Ameriprise Financial, Inc. (AMP) : Free Stock Analysis Report
SEI Investments Company (SEIC) : Free Stock Analysis Report
Federated Investors, Inc. (FII) : Free Stock Analysis Report
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