Invesco Ltd. IVZ is slated to release fourth-quarter and 2017 results tomorrow before the market opens. Its revenues and earnings are projected to grow year over year.
Last quarter, the company’s adjusted earnings surpassed the Zacks Consensus Estimate. Results were primarily driven by an increase in revenues and long-term inflows, partially offset by higher expenses.
That said, Invesco has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 6.2%.
Moreover, activities of the company in the fourth quarter encouraged analysts to revise estimates upward. As a result, the Zacks Consensus Estimate for earnings of 70 cents increased 1.4% over the last 30 days. Also, the figure reflects year-over-year improvement of 18.6%.
For 2017, the Zacks Consensus Estimate for earnings of $2.67 reflects year-over-year growth of 19.7%.
Factors to Influence Q4 Results
Per the monthly metrics data published by Invesco, its preliminary assets under management (AUM) as of Dec 31, 2017 of $937.6 billion were up 2.2% from the Sep 30, 2017 level. The rise in AUM is mainly driven by favorable market returns and net long-term inflows. Thus, given the improvement in AUM in the quarter, the related fee will likely witness an increase, thereby supporting revenue growth.
Management expects performance fees for the fourth quarter to be around $5–$7 million and other revenues to be in the range of $16–$17 million.
Notably, the Zacks Consensus Estimate for sales for the to-be-reported quarter is $1.37 billion, which is projected to witness growth of 15.1%. For 2017, the Zacks Consensus Estimate for sales is $5.21 billion.
On the cost front, management anticipates compensation expenses to increase to $370 million in the to-be reported quarter. The rise is expected to result from the Source acquisition, investments in key strategic initiatives as well as resources that are being added to meet the growth in regulatory and compliance requirements on a global basis.
The company expects market expenses to be in the range of $36–$38 million owing to seasonality. Further, property, office and technology costs are expected to be in range of $92–$94 million, driven by the impact of large technology-related projects being put into service and a rise in outsourced administration expenses.
The company expects G&A expenses to be in the range of $70–$73 million in fourth-quarter 2017.
Earnings Whispers
According to our quantitative model, it cannot be conclusively predicted if Invesco will be able to beat the Zacks Consensus Estimate this time around. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Invesco is 0.00%.
Zacks Rank: Invesco has a Zacks Rank #3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of an earnings beat.
Stocks to Consider
Here are a few stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.
The Earnings ESP for Apollo Global Management, LLC APO is +3.61% and it carries a Zacks Rank #2 (Buy). The company is slated to release fourth-quarter numbers on Feb 1.
Lazard Ltd. LAZ is slated to report results on Feb 1. It has an Earnings ESP of +2.17% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Eaton Vance Corp. EV has an Earnings ESP of +0.64% and a Zacks Rank #2. It is expected to report results on Feb 28.
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