Invesco (IVZ) Up 0.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Invesco (IVZ). Shares have added about 0.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Invesco due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Invesco Misses on Q1 Earnings, Revenues & AUM Rise
Invesco reported first-quarter 2020 adjusted earnings of 34 cents per share, missing the Zacks Consensus Estimate of 56 cents. Also, the bottom line declined 39.3% from the prior-year quarter.
Increase in operating expenses and net outflows were the major headwinds amid coronavirus scare. Yet, a rise in AUM balance and higher revenues — driven by the OppenheimerFunds buyout — were the supporting factors.
On a GAAP basis, net income attributable to common shareholders came in at $81.5 million or 18 cents per share, down from $177.7 million or 44 cents per share a year ago.
Revenues & Expenses Rise
GAAP operating revenues in the quarter were $1.60 billion, increasing 31.6% year over year. However, the figure missed the Zacks Consensus Estimate of $1.71 billion. Adjusted net revenues jumped 29.2% from the prior-year quarter to $1.15 billion.
Adjusted operating expenses were $733.1 million, up 21.6% from the prior-year quarter.
Adjusted operating margin was 36.0% compared with 32.0% a year ago.
AUM Improves
As of Mar 31, 2020, AUM was $1.05 billion, increasing 10.3% year over year. Average AUM in the first quarter totaled $1.18 billion, up 26.1% from the year-ago quarter. AUM growth was mainly driven by the closure of the deal to acquire OppenheimerFunds in May 2019, partially offset by long-term net outflows of $19.1 billion.
Share Repurchase Update
During the first quarter, Invesco didn’t repurchase any shares.
Outlook
Management expects revenues to remain under pressure in the near term, similar to first-quarter 2020, as outflows continue to hurt AUM balance.
The company now expects quarterly operating expenses to be around $675 million for the remainder of 2020 (down from prior guidance of $755 million), mainly owing to decline in compensation as well as G&A and marketing costs.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted -25.42% due to these changes.
VGM Scores
Currently, Invesco has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Invesco has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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