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Janus Capital's (JNS) Q1 Earnings Beat on High Revenues
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Janus Capital Group, Inc. recorded a positive earnings surprise of 9.5% in first-quarter 2017. The company reported adjusted earnings per share of 23 cents, beating the Zacks Consensus Estimate of 21 cents. In addition, results came above the prior-year quarter figure of 19 cents.
Better-than-expected results reflect increase in revenues. Moreover, increase in assets under management (AUM) was another optimistic point. However, rise in operating expenses was a concern.
Including one-time items, net income came in at $30.9 million, or 17 cents per share compared with net income of $35.1 million, or 19 cents in the prior-year quarter.
Revenue Rises, Expenses Flare Up
Total revenue increased 3.7% year over year to $257.6 million in the quarter, primarily on the back of higher investment management, partially offset by higher negative performance fees. However, revenues missed the Zacks Consensus Estimate of $259.4 million.
Total operating expenses increased 8.8% on a year-over-year basis to $202.3 million in the quarter. The increase was the result of a rise in almost all categories of expenses, partially offset by a fall in long-term incentive compensation, and reduced depreciation and amortization.
Strong Asset Position
Average AUM increased to $201.4 billion from $180.2 billion in the year-ago quarter and from $191.9 billion in the preceding quarter.
As of Mar 31, 2017, Janus Capital reported total AUM of $204.7 billion, up from $191.3 billion as of Mar 31, 2016 and $196.8 billion as of Dec 31, 2016.
Notably, the reported quarter witnessed a sequential increase in complex-wide assets, exhibiting net market appreciation of $12.1 billion, partly offset by long-term net outflows of $4.7 billion. Fundamental equity, Mathematical equity and fixed income long-term net outflows summed $0.6 billion, $3.8 billion and $0.3 billion, respectively.
Stable Balance Sheet
As of Mar 31, 2017, Janus Capital had stockholders’ equity of $1.66 billion, cash and investments of $655.8 million and outstanding debt of $407.4 million compared with stockholders’ equity of $1.69 billion, cash and investments of $608.4 million and outstanding debt of $403.3 million at the end of the prior-year quarter.
Cash flow from operations in the reported quarter was negative $50.1 million compared with negative $44.0 million in first-quarter 2016.
Our Viewpoint
Janus Capital has the best-in-class investment boutique, with potential for strong AUM and revenue improvement, along with competitive leverage growth. Capital deployment activities of the company are also laudable. While management foresees the recent ‘all-stock merger of equals’ agreement with Henderson Group to result in improved profitability and greater efficiency, persistent negative performance fee limit near-term profitability.
Given its healthy balance sheet, we predict Janus Capital to perform well over the long haul, while its equity-heavy portfolio makes it vulnerable to the equity market. Further, higher expenses are a key concern.
Janus Capital Group, Inc Price, Consensus and EPS Surprise
Among other investment managers, T. Rowe Price Group, Inc. (TROW - Free Report) , Invesco Ltd. (IVZ - Free Report) and Franklin Resources, Inc. (BEN - Free Report) are scheduled to release March quarter-end results on Apr 25, Apr 27 and Apr 28, respectively.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
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Janus Capital's (JNS) Q1 Earnings Beat on High Revenues
Janus Capital Group, Inc. recorded a positive earnings surprise of 9.5% in first-quarter 2017. The company reported adjusted earnings per share of 23 cents, beating the Zacks Consensus Estimate of 21 cents. In addition, results came above the prior-year quarter figure of 19 cents.
Better-than-expected results reflect increase in revenues. Moreover, increase in assets under management (AUM) was another optimistic point. However, rise in operating expenses was a concern.
Including one-time items, net income came in at $30.9 million, or 17 cents per share compared with net income of $35.1 million, or 19 cents in the prior-year quarter.
Revenue Rises, Expenses Flare Up
Total revenue increased 3.7% year over year to $257.6 million in the quarter, primarily on the back of higher investment management, partially offset by higher negative performance fees. However, revenues missed the Zacks Consensus Estimate of $259.4 million.
Total operating expenses increased 8.8% on a year-over-year basis to $202.3 million in the quarter. The increase was the result of a rise in almost all categories of expenses, partially offset by a fall in long-term incentive compensation, and reduced depreciation and amortization.
Strong Asset Position
Average AUM increased to $201.4 billion from $180.2 billion in the year-ago quarter and from $191.9 billion in the preceding quarter.
As of Mar 31, 2017, Janus Capital reported total AUM of $204.7 billion, up from $191.3 billion as of Mar 31, 2016 and $196.8 billion as of Dec 31, 2016.
Notably, the reported quarter witnessed a sequential increase in complex-wide assets, exhibiting net market appreciation of $12.1 billion, partly offset by long-term net outflows of $4.7 billion. Fundamental equity, Mathematical equity and fixed income long-term net outflows summed $0.6 billion, $3.8 billion and $0.3 billion, respectively.
Stable Balance Sheet
As of Mar 31, 2017, Janus Capital had stockholders’ equity of $1.66 billion, cash and investments of $655.8 million and outstanding debt of $407.4 million compared with stockholders’ equity of $1.69 billion, cash and investments of $608.4 million and outstanding debt of $403.3 million at the end of the prior-year quarter.
Cash flow from operations in the reported quarter was negative $50.1 million compared with negative $44.0 million in first-quarter 2016.
Our Viewpoint
Janus Capital has the best-in-class investment boutique, with potential for strong AUM and revenue improvement, along with competitive leverage growth. Capital deployment activities of the company are also laudable. While management foresees the recent ‘all-stock merger of equals’ agreement with Henderson Group to result in improved profitability and greater efficiency, persistent negative performance fee limit near-term profitability.
Given its healthy balance sheet, we predict Janus Capital to perform well over the long haul, while its equity-heavy portfolio makes it vulnerable to the equity market. Further, higher expenses are a key concern.
Janus Capital Group, Inc Price, Consensus and EPS Surprise
Janus Capital Group, Inc Price, Consensus and EPS Surprise | Janus Capital Group, Inc Quote
Janus Capital currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other investment managers, T. Rowe Price Group, Inc. (TROW - Free Report) , Invesco Ltd. (IVZ - Free Report) and Franklin Resources, Inc. (BEN - Free Report) are scheduled to release March quarter-end results on Apr 25, Apr 27 and Apr 28, respectively.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>