As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the custody bank industry, including Hamilton Lane (NASDAQ: HLNE) and its peers.
Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.
The 16 custody bank stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 5.6%.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Best Q3: Hamilton Lane (NASDAQ: HLNE)
With over $100 billion in assets under management and supervision, Hamilton Lane (NASDAQ: HLNE) is an investment management firm that specializes in private markets, offering advisory services and fund solutions to institutional and private wealth investors.
Hamilton Lane reported revenues of $190.9 million, up 27.3% year on year. This print exceeded analysts’ expectations by 12.8%. Overall, it was an incredible quarter for the company with a beat of analysts’ EPS estimates and an impressive beat of analysts’ revenue estimates.
Interestingly, the stock is up 7.1% since reporting and currently trades at $123.07.
Federated Hermes (NYSE: FHI)
With roots dating back to 1955 and a pioneering role in money market funds, Federated Hermes (NYSE: FHI) is an investment management firm that offers a wide range of funds and strategies for institutional and individual investors.
Federated Hermes reported revenues of $469.4 million, up 14.9% year on year, outperforming analysts’ expectations by 5.5%. The business had a stunning quarter with a beat of analysts’ EPS and revenue estimates.
The market seems content with the results as the stock is up 4.5% since reporting. It currently trades at $49.42.
Is now the time to buy Federated Hermes? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: P10 (NYSE: PX)
Operating as a bridge between institutional investors and hard-to-access private market opportunities, P10 (NYSE: PX) is an alternative asset management firm that provides access to private equity, venture capital, impact investing, and private credit opportunities in the middle and lower middle markets.
P10 reported revenues of $75.93 million, up 2.3% year on year, falling short of analysts’ expectations by 4.5%. It was a slower quarter as it posted a significant miss of analysts’ EBITDA and management fees estimates.
P10 delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 12.7% since the results and currently trades at $9.24.
Read our full analysis of P10’s results here.
Invesco (NYSE: IVZ)
With roots dating back to 1935 when it pioneered the first mutual fund with an objective of capital growth, Invesco (NYSE: IVZ) is a global asset management firm that offers investment solutions across equities, fixed income, alternatives, and multi-asset strategies.
Invesco reported revenues of $1.64 billion, up 8.2% year on year. This result surpassed analysts’ expectations by 38.8%. It was an incredible quarter as it also logged a beat of analysts’ EPS and revenue estimates.
Invesco pulled off the biggest analyst estimates beat among its peers. The stock is up 3.5% since reporting and currently trades at $24.29.
Read our full, actionable report on Invesco here, it’s free for active Edge members.
Voya Financial (NYSE: VOYA)
Originally spun off from Dutch financial giant ING in 2013 and rebranded with a name suggesting "voyage," Voya Financial (NYSE: VOYA) provides workplace benefits and savings solutions to U.S. employers, helping their employees achieve better financial outcomes through retirement plans and insurance products.
Voya Financial reported revenues of $1.94 billion, up 4% year on year. This print beat analysts’ expectations by 13%. Overall, it was an exceptional quarter as it also put up an impressive beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.
The stock is down 2.7% since reporting and currently trades at $71.66.
Read our full, actionable report on Voya Financial here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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