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Here's Why it is Wise to Hold Waddell & Reed (WDR) Stock Now
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Waddell & Reed Financial, Inc.’s efforts to improve efficiency will likely support bottom-line growth in the near term. Moreover, the company’s efficient capital-deployment activities reflect a strong liquidity position.
Notably, the Zacks Consensus Estimate for its current-year earnings has been revised upward by 7.8% over the past 30 days, reflecting analysts’ optimism regarding its earnings growth prospects.
However, steady outflows across all distribution channels are expected to continue hampering Waddell & Reed’s assets under management (AUM) growth. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Its price performance also does not look impressive. In the past year, shares of the company lost 15.2% against 5.1% growth recorded by the industry.
Waddell & Reed continues to invest in the Wealth Management channel by providing additional support to its advisors through training opportunities and enhanced technology tools. These efforts are expected to aid revenues, going forward.
Moreover, the company is outsourcing transfer agency transactional processing operations and taking several other measures to control expenses. These initiatives have started bearing fruit as operating expenses declined in 2019.
However, Waddell & Reed has been witnessing a fall in AUM for the past several years, owing to a challenging business environment. While total AUM increased in 2019, the same declined, witnessing a CAGR of 10.8%, over the last six years (2014-2019) mainly due to significant volatility in the equity markets. The downtrend in AUM is expected to continue in the near term, with net outflows across all distribution channels.
Also, disappointing revenue performance mainly due to lower average AUM balance is a key concern for the company. Dismal top-line performance is expected to continue as operating backdrop might remain tough in the near term as investors continue to prefer lower-risk investment products like fixed income and money market.
A few better-ranked stocks from the same space are mentioned below.
Cohen & Steers Inc.’s (CNS - Free Report) Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6% over the past 60 days. Moreover, the stock has rallied 13.4% in the past three months. It currently sports a Zacks Rank #1 (Strong Buy).
Legg Mason, Inc. has witnessed upward earnings estimate revision of 2.7% for the current fiscal year over the past 60 days. The company’s shares have gained 27.9% in the past three months. At present, the stock flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for earnings of Artisan Partners Asset Management Inc. (APAM - Free Report) has been revised 6.7% upward for the current year over the past 60 days. The stock has gained 8.4% over the past three months. It currently carries a Zacks Rank #2 (Buy).
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Here's Why it is Wise to Hold Waddell & Reed (WDR) Stock Now
Waddell & Reed Financial, Inc.’s efforts to improve efficiency will likely support bottom-line growth in the near term. Moreover, the company’s efficient capital-deployment activities reflect a strong liquidity position.
Notably, the Zacks Consensus Estimate for its current-year earnings has been revised upward by 7.8% over the past 30 days, reflecting analysts’ optimism regarding its earnings growth prospects.
However, steady outflows across all distribution channels are expected to continue hampering Waddell & Reed’s assets under management (AUM) growth. Thus, the stock currently carries a Zacks Rank #3 (Hold).
Its price performance also does not look impressive. In the past year, shares of the company lost 15.2% against 5.1% growth recorded by the industry.
Waddell & Reed continues to invest in the Wealth Management channel by providing additional support to its advisors through training opportunities and enhanced technology tools. These efforts are expected to aid revenues, going forward.
Moreover, the company is outsourcing transfer agency transactional processing operations and taking several other measures to control expenses. These initiatives have started bearing fruit as operating expenses declined in 2019.
However, Waddell & Reed has been witnessing a fall in AUM for the past several years, owing to a challenging business environment. While total AUM increased in 2019, the same declined, witnessing a CAGR of 10.8%, over the last six years (2014-2019) mainly due to significant volatility in the equity markets. The downtrend in AUM is expected to continue in the near term, with net outflows across all distribution channels.
Also, disappointing revenue performance mainly due to lower average AUM balance is a key concern for the company. Dismal top-line performance is expected to continue as operating backdrop might remain tough in the near term as investors continue to prefer lower-risk investment products like fixed income and money market.
A few better-ranked stocks from the same space are mentioned below.
Cohen & Steers Inc.’s (CNS - Free Report) Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6% over the past 60 days. Moreover, the stock has rallied 13.4% in the past three months. It currently sports a Zacks Rank #1 (Strong Buy).
Legg Mason, Inc. has witnessed upward earnings estimate revision of 2.7% for the current fiscal year over the past 60 days. The company’s shares have gained 27.9% in the past three months. At present, the stock flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for earnings of Artisan Partners Asset Management Inc. (APAM - Free Report) has been revised 6.7% upward for the current year over the past 60 days. The stock has gained 8.4% over the past three months. It currently carries a Zacks Rank #2 (Buy).
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>