Morningstar

CI Financial Earnings: Mixed Operating Results Offset by Currency and Other Gains

""
Securities In This Article
CI Financial Corp
(CIX)

There was little in narrow-moat CI Financial’s CIX second-quarter operating results that would alter our long-term view of the firm. We expect to leave our CAD 16 per share fair value estimate in place.

CI Financial closed out the June quarter with CAD 122.4 billion in core assets under management up 0.3% sequentially and 5.4% year over year, with outflows of CAD 0.1 billion offset by market gains of 0.5 billion. The company’s core asset management segment accounted for 31% of total managed assets (of CAD 398.9 billion) and 42% of base management fees during the June quarter.

As for the firm’s Canadian wealth management segment, which accounted for 21% of managed assets and 24% of management fees, assets increased 1.2% sequentially and 11.4% year over year during the second quarter. The unit also announced the purchase of Coriel, a Montreal-based wealth management firm, ahead of earnings.

And finally, CI Financial’s U.S. wealth management segment, which accounted for 48% of managed assets and 34% of management fees during the June quarter, saw its managed assets increase 3.5% sequentially and 35.2% on a year-over-year basis.

Second-quarter total revenue for CI Financial increased 37.0% when compared with the prior year’s period, as declining asset management fees (down 6.9% year over year) were more than offset by increased wealth management fees, as well as a meaningful currency exchange benefit and a significant increase in other income/gains. First-half revenue was up 17.8% year over year, which aligns with our forecast calling for double-digit top-line growth during 2023.

As for profitability, the company’s second-quarter operating margins (adjusted for restructuring and other charges) of 34.1% were up 150 basis points when compared with the June quarter of 2022, aided primarily by the meaningful currency exchange benefit and significant increase in other income/gains during the quarter, as core expenses were up 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

Consumer Defensives: Despite Angst, Thirsty Investors Have Names to Pursue

Estee Lauder, Kraft Heinz, and Dollar General are our top consumer defensive stocks.
Erin Lash, CFA

Industrials: Many Stocks Overvalued After Q3 Outperformance

Our top stocks in this sector are Chart Industries, Wesco, and CNH Industrial.
Brian Bernard, CFA, CPA

Basic Materials: Despite Index Rise, We See Multiple Long-Term Opportunities

In this sector, our favored stocks are Albemarle, Dow, and FMC.
Andrew Bischof, CFA and Travis Miller

About the Author

Greggory Warren, CFA

Strategist
More from Author

Greggory Warren, CFA, is a strategist, AM Financial Services, for Morningstar*. He covers the traditional US- and Canadian-based traditional asset managers, as well as the alternative asset managers and Berkshire Hathaway. Over the course of his career, Warren has covered not only financial services names but companies from the consumer staples and consumer cyclicals sectors, and been involved in portfolio stock selection and management.

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

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 each year 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.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

Sponsor Center