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Eaton Vance (EV) Stock Up 4.2% on Q2 Earnings & Revenue Beat

Shares of Eaton Vance Corp. EV jumped 4.2% following the release of its second-quarter fiscal 2017 (ended Apr 30) results. Adjusted earnings of 62 cents per share outpaced the Zacks Consensus Estimate of 60 cents. Also, earnings were 29% above the prior-year quarter.

Better-than-expected results were driven by a rise in revenues, partially offset by higher expenses. Further, growth in assets under management (AUM) and robust liquidity position were the tailwinds.

Net income attributable to shareholders in the reported quarter grew 30.9% year over year to $72 million.

Revenues & Expenses Record a Rise

Total revenue for the quarter amounted to $374.6 million, up 15.9% year over year. The rise was mainly driven by higher management fees, distribution and underwriting fees, as well as service fees. Additionally, the figure surpassed the Zacks Consensus Estimate of $371.1 million.

Total expenses increased 12.8% from the prior-year quarter to $256.7 million. The rise was mainly due to higher compensation and related costs, fund-related expenses, distribution expense and Service fee costs.

Total operating income jumped 23.1% year over year to $117.9 million.

Strong Liquidity Position, AUM Improves

As of Apr 30, 2017, Eaton Vance had $663.5 million in cash and cash equivalents compared with $424.2 million as of Oct 31, 2016. Further, the company had no borrowings outstanding against its new $300 million credit facility.

Eaton Vance’s consolidated AUM grew 21.5% from the year-ago quarter to $387 billion, reflecting net inflows of $12.9 billion and market price appreciation of $10.3 billion.

Share Repurchase

During the first half of fiscal 2017, Eaton Vance repurchased nearly 1.9 million shares of its Non-Voting Common Stock for $79 million under its existing repurchase authorization.

Our Viewpoint

Eaton Vance’s improving AUM along with revenue growth shall support its growth in the quarters ahead. Also, the acquisition of Calvert Investments supported the company’s financials. However, rising expenses keep us apprehensive.

Eaton Vance Corporation Price, Consensus and EPS Surprise

 

Eaton Vance Corporation Price, Consensus and EPS Surprise | Eaton Vance Corporation Quote

Eaton Vance currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Asset Managers

BlackRock, Inc. BLK reported first-quarter 2017 adjusted earnings of $5.25 per share, which handily beat the Zacks Consensus Estimate of $4.94. The better-than-expected number was largely driven by an improvement in revenues, partially offset by an increase in expenses.

Ameriprise Financial Inc.’s AMP first-quarter 2017 operating earnings per share of $2.70 comfortably surpassed the Zacks Consensus Estimate of $2.52. Rise in revenues primarily drove the better-than-expected results. However, higher expenses hurt earnings to some extent.

Invesco Ltd. IVZ reported first-quarter 2017 adjusted earnings of 61 cents per share, surpassing the Zacks Consensus Estimate of 56 cents. Better-than-expected results were primarily driven by an increase in revenues. However, an increase in operating expenses acted as a headwind.

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