WORST: 13th place. AMERIPRISE FINANCIAL — Earnings $395 million, DOWN 34% | EPS $2.82, DOWN 28% | Advisor headcount 9,979, UP 98. | Ameriprise headquarters in Minneapolis. (Photo: Bloomberg)
12th place. WADDELL and REED — Earnings $32.1 million, DOWN 31% | EPS $0.42, DOWN 25% | Advisor and associate headcount 1,367, DOWN 130. | Waddell & Reed headquarters in Shawnee Mission, Kansas.
11th place. UBS — Earnings $1.14 billion, DOWN 27% | EPS $0.30, DOWN 27% | Advisor headcount-Americas 6,790, DOWN 166. | Sergio Ermotti, CEO of UBS. (Photo: Bloomberg)
10th place. GOLDMAN SACHS — Earnings $2.25 billion, DOWN 20.5% | EPS $5.71, DOWN 18% | Investment management sales $1.6 billion, DOWN 12%. | Assets under supervision $1.6 trillion, UP 7% | David Solomon, president and CEO of Goldman Sachs. (Photo: Bloomberg)
9th place. MORGAN STANLEY — Earnings $2.42 billion, DOWN 9% | EPS $2.43, DOWN 2% | Advisor headcount 15,708, UP 26. | Morgan Stanley's New York headquarters (Photo: Bloomberg)
8th place. CITIGROUP — Earnings $4.7 billion, UP 2% | EPS $1.87, UP 11% | Private bank revenue $880 million, DOWN 3%. | Michael Corbat, CEO of Citigroup (Photo: Bloomberg)
7th place. JP MORGAN — Earnings $9.2 billion, UP 5% | EPS $2.65, UP 12% | Wealth advisor headcount 2,877, UP 237. JP Morgan Sign on a building in NYC. (Photo: AP)
6th place. BANK of AMERICA — Earnings $7.3 billion, UP 6% | EPS $0.70, UP 13% | Merrill Lynch advisor headcount 14,761, DOWN 68. | BofA CEO Brian Moynihan. (Photo: Bloomberg)
5th place. RAYMOND JAMES — Earnings $261 million, UP 7% | EPS $1.81, UP 111% | Advisor headcount 7,862, UP 258. | Raymond James CEO Paul Reilly.
4th place. STIFEL FINANCIAL — Earnings $96.9 million, UP 12.1% | EPS $1.22, UP 15% | Advisor headcount 2,160, UP 43. | Stifel CEO Ronald Kruszewski. (Photo: Bloomberg)
3rd place. WELLS FARGO — Earnings $5.86 billion, UP 14.1% | EPS $1.20, UP 25% | Advisor headcount 13,828, DOWN 571. | A Wells Fargo branch in New York (Photo: Bloomberg)
2nd place. FIRST REPUBLIC BANK — Earnings $226.6 million, UP 13.8% | EPS $1.26, UP 12% | Total wealth management assets $140 billion, UP 24% | First Republic Bank branch in New York (Photo: Bloomberg)
BEST: 1st place. LPL FINANCIAL — Earnings $155.5 million, UP 66% | EPS $1.79, UP 77% | Affiliated financial advisors 16,187, UP 120. | LPL CEO Dan Arnold.
(Related: 12 Best & Worst Broker-Dealers: Q4 Earnings, 2018)
While analysts were cautious about financial companies’ prospects for strong earnings in the first quarter of 2019, most broker-dealers reported robust results.
“We consider first-quarter earnings season a success based on the upside surprise and resilience of estimates for the rest of this year,” said John Lynch, chief investment strategist for LPL Financial, in a recent report.
“It appears an earnings recession has been averted and better earnings days lie ahead, though trade uncertainty is a huge wild card,” Lynch explained.
With results from more than 90% of S&P 500 companies, Q1’19 earnings — which were projected to be negative — have been fairly flat with Q1’18. “While flat earnings don’t sound impressive, we consider it a victory given consensus estimates were calling for a 4–5% decline when earnings season began,” Lynch explained.
According to the research group FactSet, the financial sector had the best jump in sales of any industry: “The blended (year-over-year) revenue growth rate for Q1 2019 of 5.3% is above the estimate of 4.9% at the end of the first quarter (March 31).”
In addition, seven sectors have made upward revisions to revenue estimates and anticipate positive revenue surprises, “led by the financials (to 7.8% from 5.1%) and energy (to -0.3% from -2.3%) sectors,” FactSet said in a May 10 report.
For broker-dealers, some important tailwinds include the expanding market for retail investing — which Cerulli Associates predicts will grow to $32 trillion in 2022 from $27 trillion today. The advice-mediated segment is set to jump to $24 trillion from $20 trillion over this period, the research and consulting group says.
Many broker-dealers are adding technology and services to help them take advantage of these trends. LPL, for instance, said it would boost tech spending to $150 million this year; it also plans to add an employee option to help it recruit wirehouse and other non-independent advisors.
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