Will Federated Investors (FII) Stock Be Helped Today By This Coverage Initiation?

NEW YORK (TheStreet) -- Federated Investors Inc. (FII) had coverage initiated with a "buy" rating and $35 price target at Jefferies (JEF) .

Separately, TheStreet Ratings team rates FEDERATED INVESTORS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate FEDERATED INVESTORS INC (FII) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FII, with its decline in revenue, slightly underperformed the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 4.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Capital Markets industry and the overall market, FEDERATED INVESTORS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • In its most recent trading session, FII has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has declined marginally to $47.49 million or 0.45% when compared to the same quarter last year. Despite a decrease in cash flow of 0.45%, FEDERATED INVESTORS INC is still significantly exceeding the industry average of -86.94%.
  • FEDERATED INVESTORS INC's earnings per share declined by 10.3% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, FEDERATED INVESTORS INC reported lower earnings of $1.55 versus $1.78 in the prior year. For the next year, the market is expecting a contraction of 7.1% in earnings ($1.44 versus $1.55).
  • You can view the full analysis from the report here: FII Ratings Report
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