On Sep 8, 2014, we issued an updated research report on Janus Capital Group, Inc. (JNS). Robust top-line growth and sustained rise in assets under management (AUM) reflect strength while escalating expenses continue to be the undermining factor.
Janus Capital’s focus on expansion of its fixed income business has started yielding results in the form of enhanced revenues and AUM growth. This could be seen halfway through 2014 in which the company recorded 7.3% year-over-year rise in revenues as well as a 10.6% increase in AUM.
Janus Capital, with a solid mix of investment products and healthy balance sheet, has the potential to capitalize on the growth opportunities going forward. Moreover, the company is trying to use a diversification strategy with new product innovation to further improve investment performance, which will likely boost profitability in the future.
On the flip side, the rising costs remain a challenge for Janus Capital. Though the company has been undertaking several measures to reduce expenses, the first half of 2014 failed to reflect the desired outcome. Moreover, the company’s enhanced exposure in international markets is expected to further augment costs going forward, triggered by additional international laws and regulations. Also, the company’s equity-heavy portfolio makes it vulnerable to the equity market volatilities, adding to concerns.
Moreover, despite efficient capital deployment activities and better-than-expected second-quarter 2014 performance, Janus Capital failed to gain investors’ confidence. The ambiguity prevalent in the market regarding the company’s future performance due to the deterioration in the global market conditions is evident from the 6.7% year-to-date fall in the share price.
This can also be observed in the Zacks Consensus Estimate for 2014 and 2015, which remained flat over the last 30 days.
Currently, Janus Capital carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked financial stocks include AllianceBernstein Holding L.P. (AB), Monroe Capital Corp. (MRCC) and PennantPark Floating Rate Capit (PFLT). All these stocks sport a Zacks Rank #1 (Strong Buy).
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