GAMCO Investors Upped to Strong Buy - Analyst Blog

On Dec 27, Zacks Investment Research upgraded GAMCO Investors, Inc. GBL to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

GAMCO Investors has witnessed a rise in earnings estimates on the back of solid third-quarter 2013 results. Moreover, this investment manger delivered positive earnings surprises in the 3 of the past 4 quarters with an average beat of 10.2%. The long-term expected earnings growth rate for this stock is 15.0%.

GAMCO Investors reported third-quarter (ended Sep 30) results on Nov 6. Earnings per share of $1.29 substantially beat the Zacks Consensus Estimate of 96 cents. Results also marked a 79.2% rise from 72 cents earned in the year-ago quarter.

Other income, as reported by GAMCO Investors, was the highlight of the quarter. It stood at $18.0 million, against an expense of $1.4 million in prior-year quarter. Further, as of Sep 30, 2013, assets under management (AUM) were $43.5 billion (a record high) rising 17.8% from Sep 30, 2012.

The company's efficient capital deployment activities in the forms of regular dividends, special dividends and share buybacks are encouraging as well. Moreover, with further growth in the overall equity market, we anticipate continued improvement in net inflows. This, in turn, will expectedly increase the company's AUM and thereby boost the top-line in the quarters ahead.

The Zacks Consensus Estimate for 2013 increased 8.5% to $4.58 per share over the last 60 days. For 2014, the estimate rose 3.9% to $4.81 per share over the same time frame.

Other Stocks to Consider

Some investment managers worth a look include Brookfield Asset Management Inc. BAM, Artisan Partners Asset Management Inc. APAM and Virtus Investment Partners, Inc. VRTS. All these stocks carry the same Zacks Rank as GAMCO Investors.