Updated Research Report on Invesco - Analyst Blog

On March 12, 2014, we issued an updated research report on Invesco Ltd. IVZ. The company's fourth-quarter results came in better than expected. Growth in top line driven by improvement in assets under management (AUM) was the quarter's highlight.

On Jan 30, Invesco reported fourth-quarter 2013 results. Adjusted earnings not only surpassed the Zacks Consensus Estimate but also increased 38% on a year-over-year basis.

Invesco remains an attractive asset for yield-seeking investors due to its strong capital deployment activities. In 2013, the company hiked its dividend by 30% and increased the existing share repurchase authorization by $1.5 billion. Moreover, in the full year 2013, the company returned $850.2 million to shareholders in the form of dividends and share buybacks.

Moreover, Invesco has been witnessing consistent asset inflows. Given the present improvement in equity markets, we expect asset inflows to aid top-line growth significantly in the upcoming quarters.

Nevertheless, we remain skeptical about Invesco's mounting operating expenses and high debt level. Though the company has initiated measures to reduce costs, the impact is not expected any time soon as it continues to invest in franchises.

The Zacks Consensus Estimate for 2014 decreased 2.0% to $2.43 per share over the last 60 days. However, for 2015, the Zacks Consensus Estimate remained unchanged at $2.79 per share over the same time period.

Invesco now has a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Some better-ranked investment managers include Fortress Investment Group LLC FIG, Calamos Asset Management Inc. CLMS and Lazard Ltd. LAZ. All these stocks sport a Zacks Rank #1 (Strong Buy).