Eaton Vance (EV) Q1 Earnings & Revenues Beat, Expenses Rise

Eaton Vance Corp.’s (NYSE:EV) first-quarter fiscal 2018 (ended Jan 31) adjusted earnings of 78 cents per share surpassed the Zacks Consensus Estimate of 71 cents. Also, the bottom line was 47% above the prior-year quarter’s tally.

Higher revenues and growth in assets under management (AUM) supported the results. Further, the company’s liquidity position remained strong. However, a rise in operating expenses was a headwind.

Net income attributable to shareholders was $78.1 million or 63 cents per share, up from $60.7 million or 53 cents in the year-ago quarter.

Revenues & Expenses Rise

Total revenues for the quarter amounted to $421.4 million, up 19% year over year. This upside was mainly driven by higher management fees and other revenues. Also, the top line beat the Zacks Consensus Estimate of $417 million.

Total expenses increased 14% from the prior-year quarter to $285.6 million, largely due to higher compensation and related costs, fund-related expenses and distribution expenses.

Total operating income jumped 25% year over year to $135.8 million.

Liquidity Position Strong, AUM Improves

As of Jan 31, 2018, Eaton Vance had $533.3 million in cash and cash equivalents compared with $610.6 million as of Oct 31, 2016. Further, the company had no borrowings outstanding against its new $300 million credit facility.

Eaton Vance’s consolidated AUM increased 24% from the year-ago quarter to $449.2 billion, reflecting net inflows of $37.1 billion and a market price appreciation of $48.4 billion.

Share Repurchase

During the reported quarter, Eaton Vance repurchased nearly 0.7 million shares of its Non-Voting Common Stock for $36.3 million under its existing repurchase authorization.

Our Viewpoint

Eaton Vance’s improving AUM along with revenue rise are likely to support its growth in the quarters ahead. However, rising expenses remain a major headwind.

Performance of Other Investment Managers

BlackRock, Inc.’s (NYSE:BLK) fourth-quarter 2017 adjusted earnings of $6.24 per share outpaced the Zacks Consensus Estimate of $6.08. Results benefited from improvement in revenues, rise in AUM and steady long-term inflows. However, increase in operating expenses acted as a headwind.

Ameriprise Financial Inc.’s (NYSE:AMP) fourth-quarter 2017 adjusted operating earnings per share of $3.26 comfortably surpassed the Zacks Consensus Estimate of $3.09. Results benefited from an improvement in revenues as well as growth in AUM and assets under administration. However, rise in expenses acted as a headwind.

Invesco Ltd. (NYSE:IVZ) reported fourth-quarter 2017 adjusted earnings of 73 cents per share, outpacing the Zacks Consensus Estimate of 70 cents. Results were primarily supported by higher revenues and long-term net inflows. However, increase in operating expenses was an undermining factor.

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