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Federated (FII) Q1 Earnings Beat on Increased Revenues
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Federated Investors, Inc. posted a positive earnings surprise of around 4% for first-quarter 2017, marking eighth straight quarter of earnings beat. Earnings per share of 49 cents beat the Zacks Consensus Estimate of 47 cents and improved 11% year over year.
Better-than-expected results were driven by higher revenues and lower expenses. However, decline in assets under management (AUM) was an undermining factor.
Net income for the quarter came in at $49.6 million, up 9% year over year.
Revenues Increase, Costs Decline
Total revenue for the first quarter rose 1% year over year to $273.5 million. However, the figure missed the Zacks Consensus Estimate of $292.85 million.
The year-over-year growth in revenues can mainly be attributed to reduced voluntary fee waivers related to money market funds and increased revenues from higher average equity assets. This was partially mitigated by decreased revenues from lower average money market assets.
In addition, net service fees (other) increased 26% to $45.1 million from $35.9 million in the year-ago quarter. However, administrative service fees were down 13% year over year to $46.7 million. Also, net investment advisory fees declined slightly to $181.3 million.
During the reported quarter, Federated derived 42% of its revenues from money market assets and remaining 58% from equity and fixed-income assets.
Further, supported by a rise in net investment income, the company recorded a spectacular improvement in non-operating income. It earned $1.5 million from non-operating sources, up 95% year over year.
Total operating expenses declined 1% year over year to $195.7 million. The fall primarily exhibits a decrease in compensation and related expenses resulting from lower incentive compensation, partially offset by reduced average money market assets.
Assets and AUM
Federated witnessed equity assets of $64.8 billion, up 14% year over year. Additionally, fixed-income assets grew 1.2% year over year to $51.8 billion. As of Mar 31, 2017, total AUM was $361.7 billion, down 2% year over year. Average managed assets were $361.2 billion, down slightly from the prior-year quarter.
Money market assets decreased 6% year over year to $245.2 billion. Moreover, money market mutual fund assets came in at $175.2 billion, down 22% year over year.
As of Mar 31, 2017, cash and other investments were $277.7 million and total long-term debt totaled $159.4 million, respectively, compared with $301.1 million and $165.8 million as of Mar 31, 2016.
Our Viewpoint
Federated displays substantial growth potential on the back of its diverse asset and product mix, as well as a solid liquidity position. Furthermore, strategic acquisitions are expected to be favorable for the company. Additionally, with rising interest rates, lower fee waivers will continue to aid the company’s top-line performance.
Eaton Vance Corp. (EV - Free Report) reported first-quarter fiscal 2017 (ended Jan 31) adjusted earnings of 53 cents per share, which lagged the Zacks Consensus Estimate of 58 cents. Also, earnings were 6% above the prior-year quarter
BlackRock, Inc. (BLK - Free Report) reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. Moreover, the bottom line came in 24% higher than the year-ago quarter.
Ameriprise Financial Inc.’s (AMP - Free Report) first-quarter 2017 operating earnings per share of $2.70 comfortably surpassed the Zacks Consensus Estimate of $2.52. Also, the figure represents a year-over-year increase of 24%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
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Federated (FII) Q1 Earnings Beat on Increased Revenues
Federated Investors, Inc. posted a positive earnings surprise of around 4% for first-quarter 2017, marking eighth straight quarter of earnings beat. Earnings per share of 49 cents beat the Zacks Consensus Estimate of 47 cents and improved 11% year over year.
Better-than-expected results were driven by higher revenues and lower expenses. However, decline in assets under management (AUM) was an undermining factor.
Net income for the quarter came in at $49.6 million, up 9% year over year.
Revenues Increase, Costs Decline
Total revenue for the first quarter rose 1% year over year to $273.5 million. However, the figure missed the Zacks Consensus Estimate of $292.85 million.
The year-over-year growth in revenues can mainly be attributed to reduced voluntary fee waivers related to money market funds and increased revenues from higher average equity assets. This was partially mitigated by decreased revenues from lower average money market assets.
In addition, net service fees (other) increased 26% to $45.1 million from $35.9 million in the year-ago quarter. However, administrative service fees were down 13% year over year to $46.7 million. Also, net investment advisory fees declined slightly to $181.3 million.
During the reported quarter, Federated derived 42% of its revenues from money market assets and remaining 58% from equity and fixed-income assets.
Further, supported by a rise in net investment income, the company recorded a spectacular improvement in non-operating income. It earned $1.5 million from non-operating sources, up 95% year over year.
Total operating expenses declined 1% year over year to $195.7 million. The fall primarily exhibits a decrease in compensation and related expenses resulting from lower incentive compensation, partially offset by reduced average money market assets.
Assets and AUM
Federated witnessed equity assets of $64.8 billion, up 14% year over year. Additionally, fixed-income assets grew 1.2% year over year to $51.8 billion.
As of Mar 31, 2017, total AUM was $361.7 billion, down 2% year over year. Average managed assets were $361.2 billion, down slightly from the prior-year quarter.
Money market assets decreased 6% year over year to $245.2 billion. Moreover, money market mutual fund assets came in at $175.2 billion, down 22% year over year.
As of Mar 31, 2017, cash and other investments were $277.7 million and total long-term debt totaled $159.4 million, respectively, compared with $301.1 million and $165.8 million as of Mar 31, 2016.
Our Viewpoint
Federated displays substantial growth potential on the back of its diverse asset and product mix, as well as a solid liquidity position. Furthermore, strategic acquisitions are expected to be favorable for the company. Additionally, with rising interest rates, lower fee waivers will continue to aid the company’s top-line performance.
Federated Investors, Inc. Price and EPS Surprise
Federated Investors, Inc. Price and EPS Surprise | Federated Investors, Inc. Quote
Currently, Federated 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
Eaton Vance Corp. (EV - Free Report) reported first-quarter fiscal 2017 (ended Jan 31) adjusted earnings of 53 cents per share, which lagged the Zacks Consensus Estimate of 58 cents. Also, earnings were 6% above the prior-year quarter
BlackRock, Inc. (BLK - Free Report) reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. Moreover, the bottom line came in 24% higher than the year-ago quarter.
Ameriprise Financial Inc.’s (AMP - Free Report) first-quarter 2017 operating earnings per share of $2.70 comfortably surpassed the Zacks Consensus Estimate of $2.52. Also, the figure represents a year-over-year increase of 24%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>