Earnings momentum for Virtus Investment Partners, Inc. (VRTS) has been advancing since this asset management company posted impressive third quarter results in late October, which included an earnings surprise of 16.0%. With a solid year-to-date return of 48.6%, this Zacks #1 Rank (Strong Buy) stock hit a new 52-week high on December 3.
Robust Q3 Results
On October 31, Virtus Investment Partners reported third quarter earnings per share of $1.43, topping the Zacks Consensus Estimate by 16.3% and significantly outpacing the year-ago loss of 56 cents. The improved top line was partially offset by higher operating expenses.
On an adjusted basis, total revenue surged 29% year over year to $54.1 million. Operating expenses were up 11% to $32.3 million. Moreover, operating income soared 70% to $21.8 million.
As of September 30, 2012, assets under management (AUM) were up 26% from the year-ago quarter to $41.8 billion, due to continued strong sales, positive net flows from long-term mutual funds and market appreciation.
Earnings Momentum Rises
The Zacks Consensus Estimate for 2012 has gained 9.0% to $4.60 per share over the past 60 days, as 2 out of 3 estimates were revised higher. This implies year-over-year growth of 300.9%. The Zacks Consensus Estimate for 2013 climbed 9.2% to $6.06 in the same time, again on 2 upward revisions out of 3 estimates. This implies year-over-year growth of 31.8%.
Justified Valuation
Virtus Investment Partners currently trades at 24.9x 12-month forward earnings, an 83% premium to the peer group average of 13.6x. Its price-to-book ratio of 3.8 is 73% above the peer group average of 2.2.
Virtus Investment Partners has witnessed strong price momentum since its third quarter earnings release. Moreover, the company has been almost continuously outperforming the S&P 500, along with its 200-day moving average, over the last three months. The year-to-date return for the stock is 48.6%, compared with the S&P 500’s return of 12.4%.
Headquartered in Hartford, Connecticut, Virtus Investment Partners provides investment management products and services to individuals and institutions. The company started operations in November 1995 through a reverse merger with Duff & Phelps Corporation (DUF). The company has a market capital of about $897.3 million. AllianceBernstein Holding L.P. (AB) is another Zacks #1 Rank (Strong Buy) in the same industry.
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VIRTUS INVESTMT (VRTS): Free Stock Analysis Report
VIRTUS INVESTMT (VRTS): Free Stock Analysis Report
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