On Feb 6, Zacks Investment Research upgraded Waddell & Reed Financial, Inc. (WDR) to a Zacks Rank #1 (Strong Buy).
Rationale Behind the Upgrade
Waddell & Reed has been witnessing rising earnings estimates aided by strong fourth-quarter 2013 results. Moreover, this well-known investment manger has delivered positive earnings surprises in the trailing 4 quarters with an average beat of 7.4%. The long-term expected earnings growth rate for this stock is 20.2%.
Waddell & Reed reported its fourth-quarter results before the opening bell on Feb 2. Earnings per share of 92 cents outpaced the Zacks Consensus Estimate of 82 cents. The bottom line was also up 50.8% from 61 cents per share in the year-ago quarter.
Results primarily benefited from top-line growth driven by solid inflows across all the segments. As of Dec 31, 2013, assets under management (AUM) totaled $126.5 billion, up 31.3% from $96.4 billion as of Dec 31, 2012.
The Zacks Consensus Estimate for 2014 rose marginally to $3.63 per share over the last 7 days. For 2015, the Estimate rose 1.2% to $4.15 over the same time frame.
With alternate forms of investments gaining popularity, assets managers like Waddell & Reed will continue to reap benefits. Going forward, we expect an improvement in the top line to boost capital deployment activities.
Other Stocks to Consider
Apart from Waddell & Reed, other investment mangers worth considering include Fortress Investment Group LLC (FIG), Lazard Ltd. (LAZ) and Och-Ziff Capital Management Group LLC (OZM). All these stocks carry the same Zacks Rank as Waddell & Reed.
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