We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Waddell & Reed (WDR) Stock Up on Q3 Earnings Beat, AUM Down
Read MoreHide Full Article
Shares of Waddell & Reed Financial Inc. gained 4.2%, following the release of third-quarter 2019 results. Its earnings per share of 46 cents surpassed the Zacks Consensus Estimate of 40 cents. However, the bottom line declined 21% year over year.
Results were driven by a decline in expenses. However, fall in assets under management (AUM) and lower revenues were major headwinds. Further, all distribution channels witnessed outflows.
Net income attributable to Waddell & Reed totaled $33.1 million, down 29% from the prior-year quarter.
Revenues, Expenses & AUM Decline
Revenues declined 8% year over year to $270.7 million, reflecting lower investment management fees, underwriting and distribution fees, and shareholder service fees. However, the figure beat the Zacks Consensus Estimate of $266.8 million.
Gross sales declined 30% year over year to $1.8 billion. Redemptions were $4.5 billion, slightly down from $4.6 billion recorded in the prior-year quarter. Net outflows were $2.7 billion compared with $2 billion in the year-ago quarter.
Operating expenses declined 2% year over year to $230.7 million. Almost all expense components, except for distribution costs, compensation and benefits costs, and subadvisory fees, witnessed a fall.
Operating margin was 14.8%, down from 20.2%.
As of Sep 30, 2019, AUM totaled $68.8 billion, down 14% year over year.
As of Sep 30, 2019, the company’s cash and cash equivalents, and investment securities totaled $854.2 million. Long-term debt was $94.9 million and stockholders’ equity was $839.5 million.
Performance of Distribution Channels
At the Unaffiliated channel, gross sales fell 37% year over year to $999 million. Net outflows were $1.4 billion compared with $476 million recorded in the year-ago quarter.
Gross sales at the Institutional channel were $49 million, down 41% from the year-ago quarter. The segment witnessed net outflows of $181 million compared with net outflows of $452 million witnessed a year ago.
At the Wealth Management channel, gross sales declined 15% year over year to $744 million. Net outflows totaled $1.1 billion, up 3% year over year.
Share Repurchases
Waddell & Reed bought back 2.5 billion shares for $40.7 million during the reported quarter.
Our Take
A continued decline in AUM is likely to hamper the company’s financials in the near term. Also, the presence of substantial intangibles on its balance sheet makes us apprehensive.
Waddell & Reed Financial, Inc. Price, Consensus and EPS Surprise
Cohen & Steers’ (CNS - Free Report) third-quarter 2019 adjusted earnings of 65 cents per share beat the Zacks Consensus Estimate of 63 cents. Also, the bottom line was 1.6% higher than the year-ago quarter figure.
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2019 adjusted earnings of $7.15 per share surpassed the Zacks Consensus Estimate of $6.95. However, the figure was 4.9% lower than the year-ago quarter’s number.
Invesco (IVZ - Free Report) reported third-quarter 2019 adjusted earnings of 70 cents per share, beating the Zacks Consensus Estimate of 57 cents. Also, the bottom line was 6.1% up from the prior-year quarter.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
Waddell & Reed (WDR) Stock Up on Q3 Earnings Beat, AUM Down
Shares of Waddell & Reed Financial Inc. gained 4.2%, following the release of third-quarter 2019 results. Its earnings per share of 46 cents surpassed the Zacks Consensus Estimate of 40 cents. However, the bottom line declined 21% year over year.
Results were driven by a decline in expenses. However, fall in assets under management (AUM) and lower revenues were major headwinds. Further, all distribution channels witnessed outflows.
Net income attributable to Waddell & Reed totaled $33.1 million, down 29% from the prior-year quarter.
Revenues, Expenses & AUM Decline
Revenues declined 8% year over year to $270.7 million, reflecting lower investment management fees, underwriting and distribution fees, and shareholder service fees. However, the figure beat the Zacks Consensus Estimate of $266.8 million.
Gross sales declined 30% year over year to $1.8 billion. Redemptions were $4.5 billion, slightly down from $4.6 billion recorded in the prior-year quarter. Net outflows were $2.7 billion compared with $2 billion in the year-ago quarter.
Operating expenses declined 2% year over year to $230.7 million. Almost all expense components, except for distribution costs, compensation and benefits costs, and subadvisory fees, witnessed a fall.
Operating margin was 14.8%, down from 20.2%.
As of Sep 30, 2019, AUM totaled $68.8 billion, down 14% year over year.
As of Sep 30, 2019, the company’s cash and cash equivalents, and investment securities totaled $854.2 million. Long-term debt was $94.9 million and stockholders’ equity was $839.5 million.
Performance of Distribution Channels
At the Unaffiliated channel, gross sales fell 37% year over year to $999 million. Net outflows were $1.4 billion compared with $476 million recorded in the year-ago quarter.
Gross sales at the Institutional channel were $49 million, down 41% from the year-ago quarter. The segment witnessed net outflows of $181 million compared with net outflows of $452 million witnessed a year ago.
At the Wealth Management channel, gross sales declined 15% year over year to $744 million. Net outflows totaled $1.1 billion, up 3% year over year.
Share Repurchases
Waddell & Reed bought back 2.5 billion shares for $40.7 million during the reported quarter.
Our Take
A continued decline in AUM is likely to hamper the company’s financials in the near term. Also, the presence of substantial intangibles on its balance sheet makes us apprehensive.
Waddell & Reed Financial, Inc. Price, Consensus and EPS Surprise
Waddell & Reed Financial, Inc. price-consensus-eps-surprise-chart | Waddell & Reed Financial, Inc. Quote
Waddell & Reed currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
Cohen & Steers’ (CNS - Free Report) third-quarter 2019 adjusted earnings of 65 cents per share beat the Zacks Consensus Estimate of 63 cents. Also, the bottom line was 1.6% higher than the year-ago quarter figure.
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2019 adjusted earnings of $7.15 per share surpassed the Zacks Consensus Estimate of $6.95. However, the figure was 4.9% lower than the year-ago quarter’s number.
Invesco (IVZ - Free Report) reported third-quarter 2019 adjusted earnings of 70 cents per share, beating the Zacks Consensus Estimate of 57 cents. Also, the bottom line was 6.1% up from the prior-year quarter.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>