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Schroders PLC SDR

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Stock XLON Rating as of
GBX 348.40 −4.40 (1.25%)
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Company Report

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Schroders Earnings: Disappointing Growth in AUM

Johann Scholtz

Narrow-moat Schroders reported a disappointing 1% increase in assets under management for the first quarter of 2024 compared with end-2023. If we exclude the growth from Schroders’ wealth management operations, the core asset management business’ AUM would be flat. Considering that most asset class valuations increased in the quarter, this would suggest that Schroders suffered net client outflows in its asset management business. Our current estimate of client net inflows of 4% of starting AUM looks optimistic, but Schroders still has nine months to make up lost ground. At this stage, we are not changing our earnings estimates or our GBX 500/share fair value estimate for Schroders. It does not report earnings every quarter. For the first quarter, it only discloses AUM. The subsequent full earnings disclosure will be in its interim results in August.

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Price vs Fair Value

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SDR is trading within a range we consider fairly valued.
Price
GBX 352.80
Fair Value
GBX 167.00
Uncertainty
Medium
1-Star Price
GBX 961.00
5-Star Price
GBX 656.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

The asset-management business model remains highly cash-generative with a limited need for fixed or working capital investment combined with wide operating margins driving profitability.

Bears

The active asset-management industry is in secular decline. Schroders has not been an exception. Fee margins have declined by one third over the past decade and the declining trend is showing no signs of slowing down as competition from passive investment and regulatory pressure continue to eat into margins.

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Trading Information

Previous Close Price
GBX 352.80
Day Range
GBX 347.40–360.20
52-Week Range
GBX 347.00–488.60
Bid/Ask
GBX 0.00 / GBX 374.00
Market Cap
GBX 561.64 Bil
Volume/Avg
942,211 / 2.5 Mil

Key Statistics

Price/Earnings (Normalized)
10.05
Price/Sales
1.93
Dividend Yield (Trailing)
6.09%
Dividend Yield (Forward)
6.09%
Total Yield
7.27%

Company Profile

Schroders is an independent, U.K.-based, active asset manager founded in 1804. The bulk of Schroders' client assets are from institutions, but its retail operations are more profitable. Schroders has also increasingly expanded its wealth management presence. The U.K. accounts for just under half of Schroders' assets under management, while continental Europe and Asia account for 20% each. In 2013 Schroders purchased the Cazenove private clients business from JP Morgan, expanding its wealth management business. It recently formed a joint venture with Lloyds Bank, Schroders Personal Wealth, to provide independent financial advice to midmarket clients. Wealth management makes up around 15% of earnings and revenue.
Sector
Financial Services
Industry
Asset Management
Stock Style Box
Mid Value
Total Number of Employees
6,438
Website
https://www.schroders.com

Competitors

Valuation

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Metric
SDR
BAER
DWS
Price/Earnings (Normalized)
 10.0519.9311.23
Price/Book Value
 1.301.651.02
Price/Sales
 1.932.641.83
Price/Cash Flow
 12.178.0515.34
Price/Earnings
SDR
BAER
DWS

Financial Strength

Metric
SDR
BAER
DWS
Quick Ratio
 6.59—0.70
Current Ratio
 6.66—0.70
Interest Coverage
 ———
Quick Ratio
SDR
BAER
DWS

Profitability

Metric
SDR
BAER
DWS
Return on Assets (Normalized)
 2.71%0.47%—
Return on Equity (Normalized)
 13.27%7.57%—
Return on Invested Capital (Normalized)
 11.61%——
Return on Assets
SDR
BAER
DWS
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