Legg Mason Second Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Legg Mason, Inc. (NYSE:LM) will unveil its latest earnings on Friday, October 26, 2012. Legg Mason is a global asset management company that offers investment management and related services to individual and institutional clients.

Legg Mason, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 55 cents per share, a rise of 41% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved up from 54 cents. Between one and three months ago, the average estimate moved down. It has risen from 51 cents during the last month. For the year, analysts are projecting net income of $1.47 per share, a decline of 4.5% from last year.

Past Earnings Performance: Last quarter, the company fell short of estimates by 6 cents, coming in at a loss of 7 cents per share against a mean estimate of profit of 2 cents. The company topped expectations in the fourth quarter of the last fiscal year.

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A Look Back: In the first quarter, the company swung to a loss of $9.5 million (7 cents a share) from a profit of $60 million (40 cents) a year earlier, missing analyst expectations. Revenue fell 12.1% to $630.7 million from $717.1 million.

Wall St. Revenue Expectations: Analysts predict a decline of 5.2% in revenue from the year-earlier quarter to $635.2 million.

Stock Price Performance: Between September 24, 2012 and October 22, 2012, the stock price dropped 53 cents (-2.1%), from $25.59 to $25.06. The stock price saw one of its best stretches over the last year between June 25, 2012 and July 3, 2012, when shares rose for seven straight days, increasing 10.1% (+$2.47) over that span. It saw one of its worst periods between December 9, 2011 and December 19, 2011 when shares fell for seven straight days, dropping 12.1% (-$3.17) over that span.

Key Stats:

On the top line, the company is hoping to use this earnings announcement to snap a string of four-straight quarters of revenue decreases. Revenue fell 0.7% in the second quarter of the last fiscal year, 13.2% in third quarter of the last fiscal year and 9.1% in the fourth quarter of the last fiscal year and then fell again in the first quarter.

Analyst Ratings: There are mostly holds on the stock with eight of 14 analysts surveyed giving that rating.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 3.31 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands.

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

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