(By Rich Bieglmeier) Asset managers is one of the sectors that made iStock's emerging bull list in our weekly sector performance review. It's important to remember that performance is relative to the S&P 500, since it is the most commonly used benchmark used to gauge out or underperformance.
In the last week, most stocks and sectors struggled to tread water, never mind moving above water; however, some struggles less than others, which is a sign of strength. In the process of stocks and indexes bleeding, Janus Capital Group, Inc. (JNS) may have found a bottom as other continue to sink.
On Thursday, the money-management firm reported net income of $25.1 million, or $0.14 per diluted share, on $209 million in revenue. Meanwhile, Wall Street analysts foretasted 15 cents; so, it was a minor miss. On the news, JNS shares dipped to their 200-day average on the kneejerk trade. After the weak hands ran for the exits, the pros stepped in a bid the stock higher, closing within 2 cents of the day's high.
The stock's turnaround shouldn't be too much of a surprise as it finished closing August's gap up from $7.75 to more than $9 in a single day. It's not uncommon for a stock to U-turn after making contact with a previous lift off point. Investors should expect $8ith to provide firm support going forward. If $8 fails to hold up, then iStock would consider moving out of JNS shares.
Friday's turnaround helped Janis Capital's Relative Strength score line turn higher and MACD line flatten out. A little run in the overall market could help drive shares towards $9 in the weeks ahead.
The change in sentiment is likely a result of the average assets and assets under management rising in the third quarter relative to the company's second quarter. From June 30, 2012 to September 30, 2012, average assets rose to $155.5 million from $155. Asset under management climbed slightly, too, from $ 152.4 million to $ 158.2. For an asset manager that charges fees, these two metrics are vital. In fact, analysts lifted their views for the fourth quarter following earnings.
Compared to itself, Janus Capital Group shares are relatively inexpensive. Shares are trading at 1.112 times book value, versus the five-year average of 1.816. The P/E ratio of 14.45 is 17.7% lower than the five year-average of 17.56. On a price-to-sales basis, October 26th's reading of 1.849 is below the five-year mark. Meanwhile, return-on-assets and return-on-equity are trending lower but mostly in the middle of five-year norms.
Overall, Janus Capital Group, Inc. (JNS) looks like a market performer to iStockanalyst. We think the company offers value, but limited upside; especially if stocks continue to falter. With a 2.9% dividend yield and 7.4% upside to $9, JNS could offer a total-return close to 10% for long-term investors.