On Dec 1, 2014, we issued an updated research report on New York based investment management firm Federated Investors, Inc. (FII). Shares of this company have recorded a year-to-date return of 21.4%. Recently, Federated reported impressive third-quarter 2014 results, driven by a strong top line. Moreover, the company recorded record high equity assets and a strong capital position.
The company’s reported third-quarter 2014 total revenue increased 2% year over year to $216.9 million. The revenues were also above the Zacks Consensus Estimate of $214 million. At quarter end, equity assets came in at a record $50.3 billion, up 25% year over year.
Federated’s efforts in enhancing shareholder value through its efficient capital deployment activities are commendable. During the nine months of 2014, the company paid $78.7 million as cash dividends and bought back 0.7 million shares of Class B common stock for $20.7 million.
Though Federated exhibits decent fundamentals, we remain cautious due to the current economic uncertainty across the industry. These include volatile equity markets, the ongoing fee waiving trend in money market funds to maintain positive or zero net yields and the prevailing stringent regulatory landscape.
The Zacks Consensus Estimate over the past 30 days remained stable at $1.42 and $1.76 per share for 2014 and 2015, respectively. Hence, Federated currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look in the Sector
Some better-ranked investment managers worth considering include KKR & Co. L.P. (KKR) and Monroe Capital Corp. (MRCC) with a Zacks Rank #1 (Strong Buy), while Medley Capital Corp. (MCC) carries a Zacks Rank #2 (Buy).
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