On Mar 10, 2014, we issued an updated research report on one of the leading asset managers – Janus Capital Group, Inc. (JNS). The company recently reported impressive fourth-quarter 2013 results with top-line growth and improved assets under management (:AUM). Higher operating expenses and net outflows were on the downside.
Though the company’s sound liquidity position and strong balance sheet are encouraging, we remain cautious due to the macroeconomic headwinds across the industry.
Janus Capital reported fourth-quarter 2013 earnings per share attributable to common shareholders of 21 cents, outpacing the Zacks Consensus Estimate by 10.5%.
Janus Capital’s performance in 2013 was not remarkable but decent as evident from its earnings history. Though the company missed earnings in the first two quarters of 2013, it reported in-line earnings in the third quarter and managed to deliver positive earnings surprise in the last quarter of 2013.
Janus Capital’s consistent efforts in strengthening its business are commendable. The company is currently focused on enhancing its fixed income business and crossed $25 billion in AUM for the first time in its 40-year history in 2012, and reached $28.9 billion in 2013. Moreover, the strategic alliance with Dai-ichi, the third largest life insurer in Japan, strengthens its global footprint.
Janus Capital’s capital deployment activities reflect its efforts towards enhancing shareholder value. The company increased its regular quarterly cash dividend by 17% in Apr 2013. Moreover, it has an effective share repurchase program in place. Notably, during 2013, the company repurchased $31.8 million worth of common stock and paid $39.8 million as dividends to shareholders.
We believe Janus Capital has the potential to capitalize on its strong fundamentals going forward. However, we remain cautious owing to a continuous generation of negative performance fee revenue, vulnerable equity markets and the stringent regulatory landscape that may pose threats to the company’s financials in the near term.
The mixed opinion of analysts is evident from the movement of the Zacks Consensus Estimate over the past 60 days. The Estimate for 2014 declined 2.6% to 74 cents per share, while for 2015 it advanced 1.2% to 86 cents per share.
Janus Capital currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Stocks in the investment management space worth considering include Fortress Investment Group LLC (FIG), Lazard Ltd. (LAZ) and Och-Ziff Capital Management Group LLC (OZM). All of these have a Zacks Rank #1 (Strong Buy).