Shares of global investment firm Janus Capital Group, Inc. JNS jumped 3.23% following the release of impressive first-quarter 2015 results on Apr 23, before the market opened. The company reported first-quarter earnings per share attributable to common shareholders of 23 cents, beating the Zacks Consensus Estimate by 2 cents. Moreover, results compared favorably with the prior-year quarter earnings of 16 cents.
Janus Capital Group Inc. - Earnings Surprise | FindTheCompany
Better-than-expected results reflected top-line growth and increased assets under management (AUM), aided by net inflows. However, rise in operating expenses were headwinds for the quarter.
Net income in the first quarter stood at $44.6 million, up 46.2% from $30.5 million in the prior-year quarter.
Performance in Detail
Total revenue increased 14.1% year over year to $262.7 million in the quarter, primarily due to higher investment management fee revenues attributable to higher AUM during the quarter. The quarter also witnessed an 85.5% decline in negative performance fee and 11.9% rise in shareowner servicing fees. Moreover, revenues beat the Zacks Consensus Estimate of $255 million.
Total operating expenses increased 14.3% on a year-over-year basis to $186.7 million in the quarter. The increase was driven by rise across all expense categories.
Asset Position
Average AUM increased to $186 billion from $173 billion in the prior-year quarter and $179.2 billion in the prior quarter.
As of Mar 31, 2015, Janus Capital reported total AUM of $189.7 billion, up from $174.1 billion as of Mar 31, 2014 and $183.1 billion as of Dec 31, 2014. Notably, total AUM does not include $2.4 billion of VelocityShares assets.
The reported quarter also witnessed an increase in complex-wide assets, reflecting net market appreciation of $5.6 billion and long-term net inflows of $1.1 billion. Fundamental and fixed-income long-term net inflows summed to $1.6 billion and $0.8 billion, respectively, while mathematical equity long-term net outflows totaled $1.3 billion during the quarter.
Balance Sheet
As of Mar 31, 2014, Janus Capital had stockholders’ equity of $1.6 billion, cash and investments of $698.8 million and outstanding debt of $451.3 million compared with stockholders’ equity of $1.6 billion, cash and investments of $796.5 million and outstanding debt of $450.5 million at the end of the prior quarter.
Cash flow from operations during the reported quarter was negative $58.9 million compared with negative $36 million in the prior-year quarter.
Capital Deployment Activity
During first-quarter 2015, Janus Capital repurchased over 1.39 million shares of its common stock at an average price of $16.93 per share and a total cost of $23.5 million.
Our Viewpoint
Results reflect a strong start to 2015 for Janus Capital. The company has the best-in-class investment boutique with potential for AUM and revenue along with competitive leverage growth. Moreover, capital deployment activities of the company are also commendable. Overall, we remain encouraged by the company’s strategic initiatives to boost business.
Though the fixed income segment and global operations are showing signs of improvement, the company’s equity-heavy portfolio makes it vulnerable to the equity market volatility. Nevertheless, given its healthy balance sheet, we believe Janus Capital has the potential to perform well in the long run aided by a significant rebound in these markets.
Janus Capital currently carries a Zacks Rank #2 (Buy).
Among other investment managers, Ameriprise Financial, Inc. AMP came up with first-quarter earnings per share of $2.18, which lagged the Zacks Consensus Estimate by 6.4%.
Invesco Ltd. IVZ and Legg Mason LM will report their results on Apr 30 and May 1, respectively.
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