Will Invesco (IVZ) Disappoint This Earnings Season? - Analyst Blog

Invesco Ltd. IVZ is scheduled to report first-quarter 2014 results on Thursday, May 1, before the opening bell. In the last quarter, Invesco delivered a 1.8% positive earnings surprise on the back of higher revenues and robust growth in assets under management (AUM).

Will the upcoming results mark Invesco's third consecutive earnings beat? Or will it disappoint? Let us see how things have shaped up for this announcement.   

Factors to Influence Q1 Results

The quarterly performance of the Atlanta, GA-based investment manager largely depends on the overall equity market condition. In contrast to a steady recovery in the last few quarters, the first quarter of 2014 witnessed a slower growth characterized by volatility.

Nevertheless, although there was a slump in January, the month of February saw a strong recovery. Again, in March, the market was somewhat weak.

Though Invesco's monthly highlights reflected the upheavals in the market, overall we believe that the company benefited from the volatility and witnessed better asset inflows. We expect this to reflect in its AUM growth in the quarter.

Moreover, its exposure to the exchange traded fund ETF space will continue to support its top line.

On the flip side, we remained concerned about rising expenses. Though the company has taken initiatives to control the same, the impact is not likely to be felt during the quarter.

Moreover, the company failed to impress analysts with its level of activities during the quarter. As a result, the Zacks Consensus Estimate for the quarter remained unchanged at 55 cents per share over the last 7 days.

Earnings Whispers?

Our proven model does not conclusively show that Invesco is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. That is not the case here as elaborated below.

Zacks ESP: Earnings ESP for Invesco is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at $1.00.

Zacks Rank: Invesco's Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call.

Stocks That Warrant a Look

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:  

Lazard Ltd. LAZ has an earnings ESP of +1.82% and carries a Zacks Rank #1. It is slated to report first-quarter results on May 1.

The earnings ESP for Legg Mason Inc. LM is +1.12% and it has a Zacks Rank #3. It is scheduled to report fiscal fourth-quarter and full-year 2014 results on May 1.

Another investment manger, Affiliated Managers Group Inc. AMG posted an earnings beat this quarter. Our proven model predicted that Affiliated Managers would deliver a positive earnings surprise as it had the right combination of two key ingredients.