Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Virtus Investment Partners (NASDAQ:VRTS) have gained 11% today following the company's positive earnings release after yesterday's closing bell.
So what: Virtus came through with third-quarter revenue of $100.4 million, which nudged ahead of the $98.7 million consensus of three Wall Street analysts. The company's earnings of $2.56 per share were much better than expected, as analysts had been looking for $2.27 EPS. Large year-over-year gains were seen across Virtus' report -- quarterly revenue increased by 40%, assets under management rose by 32% to $55 billion, and, thanks to a 25% improvement in operating margins (or a 40% improvement on an adjusted basis), Virtus' bottom line was 83% higher this quarter than it was for the same period in 2012.
Now what: Virtus has now regained the 12-month double it lost to declines over the summer, but at a P/E of 31 with no dividend, it's a bit more dearly priced than most of its peers. It's also worth considering that asset management, so dependent on a rising market, may be in for difficult times now that the popular consensus has tilted so overwhelmingly toward bullishness. The old Buffett saw "be fearful when others are greedy" certainly applies to this industry.
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