Skip to Content
Morningstar

Janus Henderson Earnings: Lower Expenses and Tax Rate Lift Reported Results Above Expectations

Financial Services Sector artwork

While there was little in narrow-moat-rated Janus Henderson’s JHG third-quarter results that would alter our long-term view of the firm, we expect to lower our USD 26 (AUD 39) share fair value estimate 5%-10% to account for the impact that continued equity and credit market headwinds will have on results in both the near and long terms. We view the shares as being slightly undervalued.

Janus Henderson closed out the September quarter with USD 308.3 billion in assets under management, or AUM, down 4.3% sequentially but up 12.3% year over year. This was slightly worse than our forecast calling for USD 309.3 billion in AUM, as better flow results and market performance was offset by far worse currency exchange than we were forecasting.

Total net outflows of USD 2.6 billion during the quarter were better than our projection for USD 3.4 billion in outflows, as the firm’s equity, multi-asset, and alternatives platforms posted outflows of USD 2.3 billion, USD 0.7 billion, and USD 0.5 billion, respectively. This was offset somewhat by USD 0.9 billion in positive flows for the company’s fixed-income operations.

With average AUM up 5.0% year over year, Janus Henderson’s third-quarter revenue increased just 1.6%, owing to a reduction in the firm’s realization rate due to both mix shift and ongoing industry fee compression as well as continued negative performance fees. The company’s year-to-date top-line decline of 9.2% was slightly worse than our forecast calling for an 8% decline for all of 2023, and the firm now faces a more difficult fourth quarter, which means full-year revenue will likely be down closer to 10%.

As for profitability, year-to-date adjusted (GAAP) operating margins of 29.6% (22.2%) were 530 (280) basis points lower year over year but still at the upper end of our forecast for 26%-30% (19%-22%) for all of 2023. As we noted above, we expect the fourth quarter to be tougher, though, with both revenue and profitability ending up lower year over year.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

More in Stocks

About the Author

Greggory Warren

Strategist
More from Author

Greggory Warren, CFA, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the traditional U.S.-and Canadian-based asset managers, as well as Berkshire Hathaway.

Before assuming his current role in 2017, Warren covered the financial-services sector as a senior analyst since late 2008. Prior to that time, he covered non-alcoholic beverage manufacturers and distributors, packaged food firms, food service distributors, and tobacco companies. Before joining Morningstar in 2005, Warren worked as a buy-side equity analyst for more than seven years, covering consumer staples and consumer cyclicals.

Warren holds a bachelor's degree in accounting and English from Augustana College. He also holds the Chartered Financial Analyst® designation and is a member of the CFA Society of Chicago. During 2014-19, Warren was selected to participate on the analyst panel at Berkshire Hathaway’s annual meeting, asking questions directly of Warren Buffett and Charlie Munger. The analyst panel was disbanded ahead of Berkshire’s 2020 annual meeting. Warren also ranked second in the investment services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

Sponsor Center