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Why Is Artisan Partners (APAM) Down 3.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for Artisan Partners Asset Management (APAM). Shares have lost about 3.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Artisan Partners due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Artisan Partners Q1 Earnings Top Estimates, AUM Rises

Artisan Partnersfirst-quarter 2021 adjusted earnings came in at $1.13 per share, surpassing the Zacks Consensus Estimate of $1.10. Also, the bottom line was 71% higher than the year-ago quarter figure.

Results were supported by rise in revenues. Also, higher AUM on net inflows acted as a tailwind. However, higher expenses posed an undermining factor.
Net income available to common stockholders (GAAP basis) was $77.3 million or $1.19 per share, up from $34.8 million or 53 cents per share in the prior-year quarter.

Revenues Climb, Expenses Flare Up

Revenues came in at $290.7 million, up 43% from the year-ago quarter. The rise primarily resulted from higher average AUM balance. Also, the top line surpassed the Zacks Consensus Estimate of $266 million.

Management fees earned from the Artisan Funds & Artisan Global Funds were up 44% year over year to $176.7 million. Management fees earned from Separate accounts increased 39% to $107.3 million.

Total expenses amounted to $168.9 million, up 28% year over year. The rise was largely due to higher employee compensation and benefits expenses.
Operating income was $121.8 million, up considerably from $71 million in the year-ago quarter.

AUM Increases on Net Inflows

As of Mar 31, 2021, AUM was $162.9 billion, up 71% from the year-earlier quarter. The company witnessed net inflows of $9 billion and $59.4 billion of investment returns in the first quarter.

Average AUM totaled $162.9 billion, up 43%.

Balance Sheet Position

Cash and other investments were $215.8 million compared with $155 million as of Dec 31, 2020. Also, the company’s debt leverage ratio, calculated in accordance with its loan agreements, was 0.4 as of Mar 31, 2021.

Total stockholders’ equity was $205.1 million as of Mar 31, 2021, compared to $191.0 million on Dec 31, 2020.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Artisan Partners has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision looks promising. Notably, Artisan Partners has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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