Asset manager Legg Mason, Inc. (LM) said Monday that it swung to a fiscal first quarter profit, citing cost-cutting measures and a slowing decline in assets under management.
The Baltimore-based company reported fiscal first quarter net income of $50.1 million, or 35 cents per share, compared with a net loss of $36.1 million, or 26 cents per share, in the same period last year.
Revenue fell 42%, however, to $613.1 million, which Legg Mason blamed mainly on lower fees earned due to lower assets under management.
On average, Wall Street analysts expected a lower profit of 26 cents a share, on slightly smaller revenue of $612.3 million.
The company's profit was largely due to cost-cutting measures, as operating expenses fell 33% from last year. Although assets under management plunged 29% to $657 billion from $922.8 billion a year ago, the company saw a sequential 4% improvement from the fourth quarter.
Legg Mason shares rose 81 cents, or +3.25%, in morning trading Tuesday.
The Bottom Line
We had removed LM from our “Recommended” list back on Sept.15, when the shares traded at $36.30. The shares were briefly on the “Recommended” list from the $39 level. The company has a .48% dividend yield, based on last night’s closing stock price of $23.02. The stock has technical support in the $18-20 price area. If the shares can firm up, we see overhead resistance around the $26-30 price levels. We would remain on the sidelines for now.
Legg Mason, Inc. (LM) is not recommended at this time, holding a Dividend.com DARS Rating of 2.9 out of 5 stars.
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