Friday, August 1, 2014

Invesco Q2 Earnings

The second quarterly report was released by Invesco on 7/31/14. The 2014 Q2 earnings beat our last estimate. With the most updated information, our model generated a target price of 43.65, 15.43% higher than the previously implied value. The adjusted operating income came in as $377 million, indicating an increase of 21.4% compared with the same quarter last year. The company attributes most of its business growth to the market gains in the U.S and continental Europe.

The AUM rose significantly, from $787 billion in the prior quarter to $802 billion, indicating an aggressive upward scaling. Consequently, the operating income increased to $377 billion, or 65 cents per share, from $363 million, or 60 cents, a quarter earlier. The company, during the last quarter, bought back common shares totaled $50 million, substantially sending out the signals that shares were undervalued. The market reacted to this earnings release only by bringing up the share price by 5 basis point.

Regardless of the client withdrawals issue in U.K, the growth potential of this company remains optimistic to industrial practitioners as the equity market is expected to follow an upward trend under momentum effects. According to a broad global stock benchmark, the world’s total market capitalization increased by more than 4% in the last quarter. At the meantime, Invesco has her natural competitive advantages, such as multiple distribution channels and decent asset allocation. As a result, Invesco successfully took in about $6.2 billion long-term deposits exclusive of the U.K.  This achievement largely improved the confidence of creditors as well, given the fact that senior unsecured debt rise for a subsidiary of Invesco was upgraded from A- to A. 

No comments: