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Victory Capital (VCTR) Q2 Earnings In Line With Estimates

Zacks Equity Research

Victory Capital Holdings VCTR reported second-quarter 2019 adjusted earnings of 38 cents per share in line with the Zacks Consensus Estimate. However, it compared unfavorably with 41 cents reported in the prior-year quarter.

Results benefited from decline in expenses. Also, rise in assets under management (AUM) and net inflows were major tailwinds. However, decline in revenues was an undermining factor.

Net income attributable to Victory Capital totaled $14.4 million, down 23% from the prior-year quarter.

 Revenues Down, Expenses Fall

Total revenues fell 12.5% year over year to $91.4 million. Also, the top line missed the Zacks Consensus Estimate of $93.8 million. The decline was primarily attributed to lower average AUM and a lower reported average fee rate.

Adjusted earnings before interest, taxes, depreciation and amortization were $36.6 million, down 10.1% from the year-ago quarter.

Total operating expenses decreased 8.1% to $68.6 million. Decline in almost all the components, except restructuring and integration costs,led to the fall.

As of Jun 30, 2019, total AUM was $64.1 billion, up 2.9% year over year. Net inflows of $3.7 billion supported AUM.

Capital & Liquidity Position Decent

As of Jun 30, 2019, Victory Capital had $95.3 million in cash and cash equivalents compared with $51.5 million as of Dec 31, 2018. Notably, the company had $269 million of debt, up slightly from the Dec 31, 2018 level.

Shareholders’ equity as of Jun 30, 2019, was $487 million, up from $456 million as of Dec 31, 2018.

Capital Deployment Update

During the reported quarter, the company initiated a quarterly cash dividend of 5 cents per share. The new dividend will be payable Sep 25 to shareholders of record as on Sep 10.Also, it repurchased an additional 113,297 shares, at an average price of $17.19 per share, for a total cost of $1.9 million.

Our Take

Victory Capital’s muted revenue growth, owing to significant market volatility, remains a major concern. Nevertheless, it is well positioned for growth, based on successful partnerships and global distribution capability along with a diverse product mix.

Victory Capital Holdings, Inc. Price, Consensus and EPS Surprise

Victory Capital Holdings, Inc. Price, Consensus and EPS Surprise

Victory Capital Holdings, Inc. price-consensus-eps-surprise-chart | Victory Capital Holdings, Inc. Quote

Victory Capital currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Asset Managers

Waddell & Reed Financial Inc.’s WDR second-quarter 2019 adjusted earnings of 42 cents per share outpaced the Zacks Consensus Estimate of 37 cents. However, the bottom line decreased 24% year over year.

Amid a challenging operating environment, Affiliated Managers Group Inc.’s AMG second-quarter 2019 economic earnings of $3.33 per share declined 7.8% year over year. However, the figure beat the Zacks Consensus Estimate of $3.19.

Invesco IVZ reported second-quarter 2019 adjusted earnings of 65 cents per share, beating the Zacks Consensus Estimate of 57 cents. However, the bottom line was 1.5% below the prior-year quarter figure.

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