Balanced View on Janus Capital - Analyst Blog
March 25 2013 - 6:50AM
Zacks
On Mar 20, 2013, we reiterated our long-term recommendation on
Janus Capital Group Inc. (JNS) at Neutral, based
on the company’s best-in-class investment boutique with the
potential for assets under management (AUM) and revenue along with
competitive leverage growth. However, weakness in flows remains a
matter of concern.
Why Neutral?
Janus Capital reported fourth-quarter 2012 earnings per share
attributable to common shareholders of 19 cents, beating the Zacks
Consensus Estimate by a sliver. Moreover, results compared
favorably with prior-quarter earnings of 15 cents per share. Higher
top-line growth and decreased operating expenses, reflecting better
expense management were the positives for the quarter.
Janus Capital has taken several initiatives to strengthen its
businesses. The company is currently focused on aggrandizing its
fixed income business including trading and investment. We expect
the company’s strategic efforts to lead to such strong outcomes,
which have crossed $25 billion in assets under management for the
first time in the company's 40-year history in 2012, up 28% from
2011. This, in turn is expected to aid top-line expansion in the
upcoming quarters.
However, at the current level, the asset management business is
under cyclical and secular pressures along with ongoing margin
pressures, many of which have been aggravated by the financial
crisis. These pressures include volatile markets and new regulatory
compliances. Though Janus Capital remains well positioned over the
long term, given short-term performance hindrances and macro
headwinds, a limited upside is expected in the near-term.
Following Janus Capital’s fourth-quarter 2012 results, the Zacks
Consensus Estimate for 2013 increased 3.3% to 63 cents per share
owing to the upward movement of 7 out of 11 estimates, over the
last 60 days. Moreover, the Zacks Consensus Estimate for 2014 has
moved north by 1.4% to 75 cents with 3 of 11 upward revisions over
the same time frame. Currently, the company retains a Zacks Rank #3
(Hold).
Other Major Companies to Consider
Besides Janus Capital, other investment managers that are worth
considering include Apollo Global Management, LLC
(APO), Lazard Ltd. (LAZ) and Virtus
Investment Partners, Inc. (VRTS). All the companies retain
a Zacks Rank #1 (Strong Buy).
APOLLO GLOBAL-A (APO): Free Stock Analysis Report
JANUS CAP GRP (JNS): Free Stock Analysis Report
LAZARD LTD (LAZ): Free Stock Analysis Report
VIRTUS INVESTMT (VRTS): Free Stock Analysis Report
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