Cohen & Steers' (CNS) Q4 Earnings Lag on Lower Revenues

Cohen & Steers’ CNS fourth-quarter 2018 adjusted earnings came in at 56 cents per share, missing the Zacks Consensus Estimate of 60 cents. However, the bottom line was 1.8% higher than the year-ago quarter figure.

Results were adversely impacted by fall in revenues and higher expenses. Further, decline in assets under management (AUM) and net inflows were the major headwinds.

Net income available to common stockholders (GAAP basis) for the reported quarter was $25.6 million or 54 cents per share, up from $20.4 million or 43 cents per share in the prior-year quarter.

For 2018, adjusted earnings of $2.40 per share lagged the Zacks Consensus Estimate of $2.45. However, it grew 15.9% year over year. Net income available to common stockholders (GAAP basis) was $113.9 million, up 23.9% from 2017 level.

Revenues Decline, Expenses Rise

The company’s quarterly revenues (GAAP basis) came in at $93.9 million, down 5.6% from the year-ago quarter.  The fall was mainly due to lower investment advisory and administration fees.  

For 2018, revenues (GAAP basis) increased nearly 1% year over year to $381.1 million.

Total expenses (GAAP basis) amounted to $59.6 million, up 1.8% year over year. The increase was largely owing to a rise in employee compensation and benefits expenses.

Operating income (GAAP basis) was $34.3 million, down 16.1% year over year.

Total non-operating loss was $3.3 billion against total non-operating income of $2.8 million in the prior-year quarter.

AUM Declines on Net Outflows

As of Dec 31, 2018, AUM was $57.6 billion, down 7.12% from the year-earlier quarter. The company witnessed net outflows of $1.19 billion in the reported quarter against inflows of $227 million in the prior-year quarter.

Also, average AUM for the reported quarter totaled $54.8 billion, down 11.7%.

Our Viewpoint

While Cohen & Steers’ diverse investment products are expected to continue supporting its revenue growth, increasing expenses are likely to hurt its profitability to some extent. Also, continuous decline in AUM due to outflows remains a major concern. Further, the company's high dependence on advisory revenues makes us apprehensive.

Cohen & Steers Inc Price, Consensus and EPS Surprise

 

Cohen & Steers Inc Price, Consensus and EPS Surprise | Cohen & Steers Inc Quote

Currently, Cohen & Steers carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance and Release Dates for Other Asset Managers

BlackRock’s BLK fourth-quarter 2018 adjusted earnings of $6.08 per share missed the Zacks Consensus Estimate of $6.39. Further, the figure came in 2% lower than the year-ago figure.

Ameriprise Financial, Inc. AMP and Invesco Ltd. IVZ are slated to report results on Jan 30.

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