Investors braced for a bumpy ride ahead of Eaton Vance's (NYSE: EV) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Tuesday, November 22. Eaton Vance manages investment funds and provides investment management and counseling services to individuals and institutions with high net worths.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Eaton Vance with eight of 11 analysts rating it hold. Analysts don't like Eaton Vance as much as competitor Waddell & Reed Financial overall. Seven out of 10 analysts rate Waddell & Reed Financial a buy compared to three of 11 for Eaton Vance. Analysts still rate the stock a Hold, but they are a bit more wary about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $308.1 million in revenue this quarter. That would represent a rise of 1.5% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of 44 cents per share. Estimates range from 28 cents to 50 cents.

What our community says:
 CAPS All Stars are solidly behind the stock with 85.2% giving it an "outperform" rating. The community at large concurs with the All Stars with 85.6% assigning it a rating of "outperform." Fools are gung-ho about Eaton Vance, though the message boards have been quiet lately with only 44 posts in the past 30 days. Despite the majority sentiment in favor of Eaton Vance, the stock has a middling CAPS rating of three out of five stars.

Management:
 Eaton Vance's profit has risen year over year by an average of 30.4% over the past five quarters. The company upped its gross margin by 2.8 percentage points in the last quarter. Revenue rose 19.9% while cost of sales rose 5.2% to $66 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q3

Q2

Q1

Q4

Gross Margin

79.8%

80.2%

79.5%

79.3%

Operating Margin

35.3%

35.9%

33%

34.9%

Net Margin

20.8%

19.2%

12%

16.6%

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Earnings estimates provided by Zacks