Legg Mason Earnings: Profit Streak SNAPPED

S&P 500 (NYSE:SPY) component Legg Mason Inc. (NYSE:LM) swung to a loss in the first quarter, missing analysts’ forecast. Legg Mason is a global asset management company that offers investment management and related services to individual and institutional clients.

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Legg Mason Inc. Earnings Cheat Sheet

Results: Reported a loss of $9.5 million (7 cents per diluted share) in the quarter. Legg Mason Inc. had a net income of $60 million or 40 cents per share in the year-earlier quarter.

Revenue: Fell 12% to $630.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Legg Mason Inc. fell short of the mean analyst estimate of one cent per share. It fell short of the average revenue estimate of $645.5 million.

Quoting Management: Mark R. Fetting, Chairman and CEO of Legg Mason said, “In the quarter, Legg Mason made significant progress positioning the firm for long-term revenue and earnings growth, even amid continued volatility in the equity markets which led to a drop in revenues. Importantly, flow trends continue to improve, as Legg Mason’s global retail distribution platform worked to leverage our investment affiliates’ performance and introduced new products, while our affiliates continued to strengthen their institutional businesses. During the quarter we completed a transaction to reduce outstanding debt and refinance debt due in 2015 with longer maturities. While that transaction and our investment in fund launches negatively impacted this quarter’s earnings, we now have a more efficient capital structure, allowing us greater flexibility to invest in organic growth, and fill product and geographic gaps, while consistently returning capital to shareholders.”

Key Stats:

Revenue has fallen in the past four quarters. Revenue declined 9.1% to $648.6 million in the fourth quarter of the last fiscal year. The figure fell 13.2% in the third quarter of the last fiscal year from the year earlier and dropped 0.7% in the second quarter of the last fiscal year from the year-ago quarter.

The company’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $76.1 million in the fourth quarter of the last fiscal year, a profit of $28.1 million in the third quarter of the last fiscal year and $56.7 million in the second of the last fiscal year.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 54 cents versus a mean estimate of net income of 48 cents per share.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the second quarter has risen to 54 cents per share from 51 cents. At $1.65 per share, the average estimate for the fiscal year has fallen from $2.06 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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