What happened
Several financial stocks are rising today thanks to a bullish market and positive earnings results.
Shares of the digital bank and one-stop-shop financial services company SoFi (SOFI -0.28%) were up roughly 7.5% as of 12:44 p.m. ET. Meanwhile, global asset manager Janus Henderson's (JHG 0.69%) stock jumped 17%, and shares of the online lending company Enova International (ENVA 1.88%) were up about 12%.
So what
Janus Henderson reported fourth-quarter earnings results this morning, delivering diluted earnings per share of $0.39 on total revenue of $515 million. Earnings came up short of analysts' estimates but revenue soundly beat them. On an adjusted basis to account for one-time acquisition and transaction costs, Janus would have exceeded earnings estimates by a lot as well.
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"The current environment remains uncertain. Our focus will be to control what we can control and position Janus Henderson for growth," Janus CEO Ali Dibadj said in an earnings statement. "We have a strong balance sheet, good cash generation, disciplined investment teams and processes, and tight cost management."
Assets under management (AUM) at Janus rose by 5% in the quarter to $287 billion due to a decline in the strength of the U.S. dollar and market performance. However, the company also saw $11 billion of AUM outflows. AUM at the end of 2022 was still way down from 2021.
Enova released its fourth-quarter results after the market closed yesterday. The company reported diluted earnings per share of $1.56 on revenue of $486 million. Enova missed analysts' earnings estimates, although beat them on an adjusted basis, and revenue surpassed expectations slightly as well.
Charge-offs as a percentage of total loans, which is a good indicator of loan losses, hit 8.8% in the quarter, while the 30-plus day delinquency rate hit 6.7%. Charge-offs were only up modestly from the third quarter of the year, while the delinquency rate rose from 5.6%. Still, management on Enova's earnings call guided for revenue and adjusted earnings in 2023 to grow faster than the company's loan origination growth, which is expected to be in the 10% to 15% range.
SoFi reported strong earnings results earlier this week that were well received by the market. Today, the fintech company seems to be riding higher along with Nasdaq Composite, a proxy for the broader tech sector, which is up more than 350 points. Tech stocks are rallying after the Federal Reserve capped off its first meeting of the year yesterday afternoon. The Fed raised interest rates by a quarter point and didn't make any comments that surprised investors.
What now
Both Janus and Enova reported solid earnings results and saw their stocks benefit significantly with favorable market conditions today. If the Fed can end its rate-hiking campaign soon, that will likely boost all three of these companies.
However, I am not super bullish on any of these names at the moment. Janus' results are very dependent on stock market performance, which I think is still a bit of an uncertainty right now. Enova caters to a lower-quality borrower that could struggle more significantly way in the event of a recession.
And while I like SoFi's broader strategy, I still think the company looks expensive and is being given too much credit by the market.
