Cohen & Steers reported a decline in earnings for the third quarter of 2023, with earnings per share dropping to $0.70 from $0.92 in the same period the previous year. The company's revenue also fell, from $140.2 million to $123.6 million, and operating income decreased to $43.9 million from $60.1 million. Despite these drops, the company expressed optimism about investment opportunities in the energy and real estate sectors and reported better-than-expected flow results. According to InvestingPro data, the company's market cap stands at $2600M with a P/E Ratio of 20.45.
Key takeaways from the earnings call include:
- The company's assets under management decreased by 6.5% to $75.2 billion.
- The compensation-to-revenue ratio is expected to remain at 40.5% for the full year.
- General and administrative (G&A) expenses are projected to increase by 5% to 7% from the previous year.
- Cohen & Steers is preparing to operationalize its non-traded REIT, Cohen & Steers Income Opportunities REIT.
- The company anticipates a 25% to 30% decline in real estate prices before proceeding with its investment strategy.
- The company has identified potential allocations of $3.5 billion to their asset classes on the institutional side.
- The company's CFO, Matt Stadler, is set to retire.
During the call, the company's Chief Investment Officer discussed the market environment and the firm's investment performance, expressing optimism about the performance of preferreds due to attractive yields and solid fundamentals. The CIO also highlighted the energy industry's significant changes and the need for both alternative and traditional energy sources.
The company has completed the registration process for its non-traded REIT with the SEC and all 50 states. While they are prepared to commence their investment strategy, they are waiting for real estate prices to decline further, expecting a 25% to 30% decrease.
In terms of geographic expansion, the company has seen increased business opportunities in Asia, particularly in Singapore, where they have opened an office and appointed heads of sales. They have identified potential allocations of $3.5 billion to their asset classes on the institutional side.
The retirement of the company's CFO, Matt Stadler, was announced during the call. The company expressed gratitude for his contributions and assured a smooth transition process to find his successor.
In terms of future plans, the company aims to keep G&A expenses flat year-over-year, focusing on controlling costs and limiting non-client-facing expenses. The company also mentioned making corporate infrastructure investments to support future growth.
During the call, Joe Harvey and John Dunn discussed the potential for infrastructure to be a significant contributor to investment flows. They noted that infrastructure has been underinvested globally and that there is a need for significant capital investment. They believe that investing in both listed and private markets can enhance returns in the asset class.
InvestingPro Tips suggests that despite the company operating with a high return on assets, its stock has fared poorly over the last month. The company's stock is currently trading near its 52-week low and has fallen significantly over the last three months. For more insights, visit InvestingPro where 14 additional tips are listed.
The company is expected to provide guidance for 2024 during the next call.
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