Westwood Holdings Group, Inc. :WHG-US: Earnings Analysis: Q3, 2017 By the Numbers : December 11, 2017

Westwood Holdings Group, Inc. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of Westwood Holdings Group, Inc. – Affiliated Managers Group, Inc., Franklin Resources, Inc., Pzena Investment Management, Inc. Class A, GAMCO Investors, Inc. Class A, Diamond Hill Investment Group, Inc., U.S. Global Investors, Inc. Class A and Silvercrest Asset Management Group, Inc. Class A (AMG-US, BEN-US, PZN-US, GBL-US, DHIL-US, GROW-US and SAMG-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 33.49 million, Net Earnings of USD 4.13 million.
  • Gross margins widened from 89.34% to 89.94% compared to the same period last year, operating (EBITDA) margins now 31.27% from 30.78%.
  • Year-on-year change in operating cash flow of 12.95% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings declined although operating margins improved from 28.49% to 29.14%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 33.49 33.76 32.62 31.09 31.78
Revenue Growth (%YOY) 5.4 8.81 11.99 -1.5 -2.08
Earnings (mil) 4.13 6.9 6.06 7.58 5.89
Earnings Growth (%YOY) -29.81 21.82 72.17 61.66 -16.06
Net Margin (%) 12.34 20.43 18.59 24.37 18.53
EPS 0.49 0.83 0.73 0.92 0.72
Return on Equity (%) 2.69 4.66 4.17 5.28 4.23
Return on Assets (%) 9 16.13 14.03 17.35 14.2

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Market Share Versus Profits

Revenues History
Earnings History

WHG-US’s change in revenue this period compared to the same period last year of 5.40% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that WHG-US is holding onto its market share. Also, for comparison purposes, revenues changed by -0.78% and earnings by -40.08% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline did not come as a result of a contraction in gross margins or because of any cost control issues. Both gross margins and operating margins (EBITDA) margins actually improved over this time frame. Gross margins went from 89.34% to 89.94%, while operating margins improved from 30.78% to 31.27% over this period. For comparison, gross margins were 91.24% and EBITDA margins 33.51% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

WHG-US’s change in operating cash flow of 12.95% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.


Despite an overall improvement in operating (EBIT) margins, the company’s earnings fell. EBIT margins went from 28.49% to 29.14%. The decline in earnings appears to be largely because of one-time items. Pretax margins declined from 28.49% to 17.17%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Westwood Holdings Group, Inc.

Company Profile

Westwood Holdings Group, Inc. manages investment assets and provides services for its clients through its subsidiaries, Westwood Management Corp., Westwood Trust Co. and Westwood International Advisors, Inc. The company operates its business through two segments: Advisory and Trust. The Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals and the Westwood Funds, as well as investment sub advisory services to mutual funds and its trust segment. The Trust segment provides trust and custodial services to its clients and to its advisory segment and sponsors common trust funds to institutions and high net worth individuals. Westwood Holdings Group was founded by Susan Montgomery Byrne on December 12, 2001 and is headquartered in Dallas, TX.

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