Cohen & Steers (CNS) Surges 92% YTD: Can The Rally Continue?
Zacks Investment Research | Nov 24, 2019 09:54PM ET
Shares of Cohen & Steers Inc (NYSE:CNS) have jumped 92% year to date, significantly outperforming the industry ’s rally of 8.2%. Improving assets under management (AUM) balance and various investment strategies drove the company’s strong financial performance. This along with improvement in operating backdrop supported the price performance.
Notably, the recent price performance marks a rebound after Cohen & Steers’ shares witnessed a 27.4% decline in the last year. The deterioration in price resulted from challenging operating environment, mainly in the latter part of 2018.
The Zacks Rank #1 (Strong Buy) stock has been witnessing upward earnings estimate revisions. Over the past 60 days, the Zacks Consensus Estimate for the same moved 3.7% and 8.6% north for 2019 and 2020, respectively.
While it might not witness similar share price performance in the future, we believe that the following factors are adequate to support steady price appreciation for Cohen & Steers.
Revenue Growth: Given steady improvement in AUM balance, total revenues (GAAP basis) of Cohen & Steers witnessed a five-year CAGR of 2.1% (2014-2018). Furthermore, its several investment strategies and diverse product offerings are likely to continue supporting revenue growth.
The Zacks Consensus Estimate for the company’s revenues suggests year-over-year grow of 7.8% for 2019 and 13.1% for 2020.
Earnings Strength: Cohen & Steers’ earnings have witnessed 11% rise in the past three-five years compared with the industry’s 5.8% growth. The momentum is anticipated to continue in the near term as well. The Zacks Consensus Estimate for the company’s earnings suggests year-over-year growth of 4.6% for 2019 and 15.9% for 2020.
Also, the company’s long-term (three-five years) expected earnings growth rate of 8.2% promises rewards for shareholders.
Impressive Capital Deployment: Cohen & Steers is actively involved in capital-deployment activities. The company has been increasing its dividend payout annually since 2011, with the latest one announced in February 2019. Also, it announced a special dividend in November 2019.
Driven by strong liquidity position and consistently improving earnings, the company’s capital deployment activities look sustainable. This is expected to further enhance shareholder value.
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Strong Leverage: Cohen & Steers’ debt/equity ratio is nil compared with the industry’s 0.29. This reflects that the company will be financially stable, even during adverse economic situations.
Superior Return on Equity (ROE): Cohen & Steers’ ROE is 46.35% compared with the industry’s 12.28%. This highlights the company’s commendable position over its peers.
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