Despite concerns about outflows, fourth-quarter is shaping up to be an excellent earnings season for asset management and mutual fund firms.

To be sure, the stock market’s recent rally has cooperated with the firms that dominated the fourth-quarter 2010 earnings news headlines in the finance sector this week. Flows for many managers now remain positive as equity fund outflows and fixed income fund inflows have achieved some equilibrium, making asset management stocks a good buy.

“We think flows for many managers remained positive as equity fund outflows and fixed income fund inflows both moderated. We believe the risk/reward in asset management stocks is still attractive despite the recent rally, and our top picks include Franklin Resources (BEN), Invesco Ltd. (IVZ) and Calamos Asset Management (CLM),” wrote equity analysts Robert Lee and Larry Hedden of Keefe, Bruyette & Woods North America Equity Research in an asset managers preview earlier this month.

Their predictions were correct, as both Franklin and Invesco reported strong earnings on Thursday. Calamos is scheduled to report on Feb. 4.

Franklin’s profits rose 74%, with the mutual fund company posting earnings of $501.2 million in profits, or $2.23 per share, on $1.70 billion in revenues versus $372.9 million in net income, or $1.65 per share, on $1.53 billion in revenues for the third quarter. In the fourth quarter of 2009, net income was $355.6 million, or $1.54 per share, on $1.38 billion in revenues.

Invesco’s profits also rose—by 44%–but nevertheless disappointed analysts’ expectations as stronger stock market results were tempered by fallout from the firm’s June acquisition of Morgan Stanley’s mutual-funds business. EPS for the year was 32.9% higher, at $1.01 compared with $0.76 in 2009, while quarterly

EPS came in at $0.37 compared with $0.32 in the third quarter. Analyst consensus was for EPS of $0.40. Profits totaled $465.7 million versus $322.5 million in 2009.

The most recent addition to the positive earnings new, T. Rowe Price (TROW), on Friday morning reported a 26% earnings increase thanks to a nearly 20% gain in revenue and a rise in assets under management (AUM), beating analysts’ estimates.

Both AUM and investment-advisory fees continue to rise for T. Rowe, and President and Chief Executive James A.C. Kennedy asserts that the company has "largely recovered" from the economic crisis. T. Rowe reported a profit of $190.8 million, or $0.72 a share versus analysts’ expectations for $0.69, up from $152 million, or $0.57 cents, a year earlier. Revenue rose 19% to $647.5 million.

Earlier in the week, on Tuesday, investor willingness to put money into riskier securities pushed BlackRock (BLK) past analysts’ expectations, with diluted earnings per share at $3.42 versus EPS estimates of $2.90. The world’s largest asset manager, clearly benefiting from its acquisition of Barclays Global Investors, broke its quarterly earnings record as profits skyrocketed 107% higher and annual revenue was 157% higher.

Legg Mason (LM) on Wednesday announced a 37% jump in profits for the third quarter of 2011 along with a 5% rise in revenues, thanks to an increase in fees. But the firm also reported continuing outflows as investors sought to put their money somewhere other than mutual funds. Investors withdrew $12.9 billion from bond funds and $3.3 billion from stock funds in the quarter as profits totaled $61.6 million, or $0.41 per share, versus $0.28 a year ago.

Also on Wednesday, Piper Jaffray (PJC) reported strong sales and better-than-expected net revenues as the investment bank’s capital-markets unit saw an 18% increase in the quarter to $151 million. The firm saw profits of $9.4 million, or $0.49 per share, for the fourth quarter of 2010 versus $12.3 million, or $0.63, in the same period of 2009. Piper Jaffray’s results included a $9.1 million after-tax charge that reduced net income by $0.48 per share for a charge linked to Piper Jaffray restructuring of its European operations. Excluding that charge, the company earned $0.97 cents per share.

Another company that released Q4 2010 earnings on Thursday, Janus Capital Group (JN), beat both EPS and revenue estimates, reporting net income of $65.9 million, or $0.36 per share, compared with net income of $37.0 million, or $0.20 per share, in the fourth quarter of 2009. Revenue was $275.7 million versus $250.6 million in the year-ago period and $243.8 million in the third quarter for the mutual fund company. This performance beat analysts’ earnings estimates of $0.21 cents a share and revenues estimates of $262.7 million.

Read a roundup of week one of 2010 Q4 earnings at