Waddell & Reed Hits New 52-Week High - Analyst Blog

Shares of Waddell & Reed Financial, Inc. WDR crafted a new 52-week high, touching $74.33 during the trading session on Mar 13. However, the stock, which is in the investment management space, closed the session at $72.01, reflecting a solid return of 71.0% in a year's time. The trading volume for the session was 647,478 shares.

Despite hitting its 52-week high, this Zacks Rank #3 (Hold) stock has plenty of upside left, given the strong estimate revisions it witnessed over the last 60 days. Further, the long-term expected EPS growth rate now stands at 19.2%.

Growth Drivers

Impressive fourth-quarter 2013 results, including significant improvement in the top line, increased assets under management (AUM) and efficient capital deployment activities were the primary growth drivers for Waddell & Reed.

On Feb 4, Waddell & Reed reported its fourth-quarter 2013 earnings of 92 cents per share, beating the Zacks Consensus Estimate by 12.2%. Further, results came in well ahead of the prior-year quarter earnings of 61 cents.

Notably, with this, the company has delivered positive earnings surprises in all the 4 quarters of 2013, with an average beat of 7.4%.

Operating revenues were up 23.8% year over year. Sales in all the channels – Advisors, Wholesale and Institutional – witnessed a rise, which led gross sales surge 71.2% year over year.

Further, net inflows were $4.0 billion compared with net outflows of $165 million in the year-ago quarter. As of Dec 31, 2013, AUM totaled $126.5 billion, up 31.3% from $96.4 billion as of Dec 31, 2012. Additionally, in 2013, Waddell & Reed returned $168.2 million to shareholders in the form of dividends and share repurchases.

On the downside, increased underwriting and distribution expenses, compensation and related costs as well as general and administrative costs pushed up expenses by 19.2% year over year.

Estimate Revisions Show Potency

Over the last 60 days, the Zacks Consensus Estimate for 2014 advanced 1.4% to $3.67 per share. Also, for 2015, it moved north around 7% to $4.24 per share.

Some other stocks in this space worth considering include Calamos Asset Management Inc. CLMS, Lazard Ltd. LAZ and Fortress Investment Group LLC FIG. All these companies carry a Zacks Rank #1 (Strong Buy).