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Results from 'Magnificent Seven' duo show cloud revenue boosted by strong AI demand

Will Victory Capital (VCTR) Disappoint This Earnings Season?

Zacks Equity Research

Victory Capital Holdings VCTR is scheduled to report third-quarter 2019 results on Nov 4, after market close. Its earnings and revenues are expected to have grown year over year.

In the last reported quarter, the company benefited from growth in assets under management (AUM) and lower expenses. However, fall in revenues acted as a headwind.

It has a decent earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 1%.

Victory Capital Holdings, Inc. Price and EPS Surprise

Victory Capital Holdings, Inc. Price and EPS Surprise
Victory Capital Holdings, Inc. Price and EPS Surprise

Victory Capital Holdings, Inc. price-eps-surprise | Victory Capital Holdings, Inc. Quote

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However, activities of Victory Capital in the third quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for earnings per share of 89 cents for the to-be-reported quarter has been revised downward over the past 30 days. Nonetheless, the figure indicates 97.8% rise from the year-ago quarter’s reported number.

The consensus estimate for sales of $219.8 million suggests significant growth on a year-over-year basis.

Factors at Play

The performance of equity markets was impressive in the quarter, with the S&P 500 Index rallying 1.7% sequentially. Therefore, the company’s results are likely to reflect a rise in AUM on overall inflows. Per the monthly metrics data published by Victory Capital, its September-end AUM of $145.8 billion was up from $64.1 billion as of Jun 30, 2019.

Given the increase in AUM in the quarter, the related fee is also expected to have witnessed some improvement, driving overall revenues.

Expenses are likely to have declined during the quarter on the back of Victory Capital’s operational efficiency, as witnessed in the prior quarters.

Earnings Whispers

According to our quantitative model, chances of Victory Capital beating the Zacks Consensus Estimate in the third quarter are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Victory Capital is -1.43%

Zacks Rank: Victory Capital currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

Chart

Performance of Other Investment Managers

Waddell & Reed Financial Inc.’s WDR reported third-quarter 2019 earnings per share of 46 cents that surpassed the Zacks Consensus Estimate of 40 cents. However, the bottom line declined 21% year over year.

Franklin Resources Inc. BEN reported a negative earnings surprise of 6.2% in fourth-quarter fiscal 2019 (ended Sep 30). Earnings of 61 cents per share lagged the Zacks Consensus Estimate of 65 cents. Results also compare unfavorably with the earnings of 96 cents per share recorded in the prior-year quarter.

T. Rowe Price Group, Inc. TROW delivered a positive earnings surprise of 7.6% in third-quarter 2019. Adjusted earnings per share came in at $2.13, outpacing the Zacks Consensus Estimate of $1.98. Results also improved 7% from the year-ago figure of $1.99.

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Franklin Resources, Inc. (BEN) : Free Stock Analysis Report
 
Waddell & Reed Financial, Inc. (WDR) : Free Stock Analysis Report
 
T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
 
Victory Capital Holdings, Inc. (VCTR) : Free Stock Analysis Report
 
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Zacks Investment Research