Eaton Vance (EV) Q2 Earnings Meet Estimates, Stock Falls 5%
Zacks Investment Research | May 23, 2018 10:37PM ET
Eaton Vance Corp.’s (NYSE:EV) second-quarter fiscal 2018 (ended Apr 30) adjusted earnings of 77 cents per share were in line with the Zacks Consensus Estimate. The bottom line came in 24% higher than the prior-year quarter’s tally.
Shares of Eaton Vance have declined more than 5% since the earnings release on Tuesday. Investors seem to be wary of the decline in revenues (down 2%) and fall in assets under management (down 2%) on a sequential basis.
Higher revenues and growth in assets under management (AUM) on a year-over-year basis supported the results. Further, the company’s liquidity position remained strong. However, a rise in operating expenses was a headwind.
Net income attributable to shareholders was $96.6 million or 78 cents per share, up from $72 million or 62 cents per share in the year-ago quarter.
Revenues Rise, Expenses Flare Up
Total revenues were $414.3 million, up 11% year over year. This upside was mainly driven by higher management fees and other revenues. However, the top line lagged the Zacks Consensus Estimate of $425.3 million.
Total expenses 10% from the prior-year quarter to $281.6 million, largely due to higher compensation and related costs, fund-related expenses and distribution expenses.
Total operating income grew 13% year over year to $132.7 million.
Liquidity Position Strong, AUM Improves
As of Apr 30, 2018, Eaton Vance had $511.7 million in cash and cash equivalents compared with $610.6 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 increased 24% from the year-ago quarter to $440.1 billion, reflecting net inflows of $28.6 billion and a market price appreciation of $24.5 billion.
Share Repurchase
During the first six months of fiscal 2018, Eaton Vance repurchased nearly 2 million shares of its Non-Voting Common Stock for $109.5 million under the company’s existing repurchase authorization.
Our Viewpoint
Eaton Vance’s improving AUM, along with revenue rise, will likely support its growth in the quarters ahead. However, escalating expenses remain a major headwind.
Eaton Vance Corporation Price, Consensus and EPS Surprise
Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.