- Cowen reported positive second quarter earnings Thursday morning.
- This earnings release cements my long-term bull thesis in Cowen.
- In my previous article, I discussed the numerous tailwinds that would allow Cowen to outperform.
Cowen Group, Inc. (NASDAQ:COWN) announced positive second quarter earnings results Thursday morning. Net income during the quarter was $8.4 million, or $0.07 per share, as compared to net income of $1.1 million, or $0.01 per share in the same period last year. CEO Peter Cohen remarked about the positive quarter in the earnings release:
"The six and 12 months ended June 30, 2014 marked Cowen's most profitable period since the Cowen / Ramius business combination in 2009. During the second quarter 2014, the broker dealer saw solid contribution from the equity capital markets and cash equities businesses."
Source: Digital Journal
Revenue in the quarter was $111.5 million, which is up from $81.1 million in the prior year quarter. The revenue increase was primarily driven by the broker-dealer segment increasing revenue 20% during the quarter. Economic income increased an outstanding $7 million, to $8.5 million, in the second quarter, compared to the same period a year ago. The company also grew assets under management an outstanding $1.1 billion during the quarter, and $2.2 billion in the first half of 2014. The current figure stands at $11.6 billion in total. The final positive takeaway to investors is that Cowen's Board of Directors approved a $11.3 million increase in the company's share repurchase program, which now stands at $25 million.
In my previous article, "Cowen Group: Incredible Upside in 2014," I cited numerous factors that would lead to Cowen outperforming. I discussed how the low interest rate environment would push investors to seek yield and grow assets under management for Cowen. I also discussed how a slew of M&A would benefit its investment banking revenue and how a stock market recovery would grow its brokerage service revenue. Finally, I cited Cowen's large tax loss carry forwards allowing it to mitigate taxes moving forward. With all of these factors staying in place and Cowen growing its market share in these investment banking and brokerage services, Cowen is poised to continue to outperform.
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