Invesco (IVZ) Down 0.4% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Invesco (IVZ). Shares have lost about 0.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Invesco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Invesco Q1 Earnings & Revenues Miss Estimates, AUM Rises

Invesco’s first-quarter 2022 adjusted earnings of 56 cents per share missed the Zacks Consensus Estimate of 61 cents. The bottom line declined 17.6% from the prior-year quarter.

Results were adversely impacted by a rise in operating expenses. However, improvement in revenues and solid growth in AUM balance act as tailwinds.

On a GAAP basis, net income attributable to common shareholders was $197.7 million or 43 cents per share, down from $267.8 million or 58 cents per share a year ago.

Revenues & Expenses Rise

Adjusted net revenues increased marginally year over year to $1.25 billion. The top line missed the Zacks Consensus Estimate of $1.29 billion. GAAP operating revenues were $1.63 billion, growing 1.8%.

Adjusted operating expenses were $757.8 million, up 1.3% from the prior-year quarter. Invesco achieved 96% of the targeted $200 million or $193 million in annualized net savings at the end of the reported quarter.

Adjusted operating margin was 39.5%, down from 40.2% a year ago.

AUM Balance Improves

As of Mar 31, 2022, AUM was $1.56 trillion, which grew 10.8% year over year. Average AUM at first-quarter end totaled $1.55 trillion, up 10.8%.

The company witnessed long-term net inflows of $17.2 billion during the quarter.

Strong Balance Sheet

As of Mar 31, 2022, cash and cash equivalents were $1.31 billion, down 30.9% sequentially. Further, long-term debt amounted to $2.09 billion.

Share Repurchase Update

During the first quarter, IVZ repurchased the previously announced $200 million worth of its shares.

Outlook

Management expects total net savings related to its cost-saving program of $200 million by 2022-end. Of this, $193 million or 96% has already been achieved (exceeding the $150 million target set for 2021). The remaining savings will be realized by 2022-end.

Notably, of the total cost savings of $200 million, 65% will be from compensation and 35% will be spread across property, property office technology and G&A expenses.

Total one-time transaction costs for the realization of the cost-saving program are projected to be $250-$275 million. Of this, $240 million have already been incurred. The company expects the remaining transaction costs of $35 million to be incurred through the end of 2022.

Money market fee waivers are expected to be $5 million in the second quarter of 2022.

For the second quarter, the non-GAAP effective tax rate is expected to be 24-25%.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -11.5% due to these changes.

VGM Scores

At this time, Invesco has a poor Growth Score of F, a grade with the same score on the momentum front. However, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise 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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