Record quarter at Legg Mason

54 cents a share is a rise of 32%, and well above forecasts

July 20, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Legg Mason Inc. blew away Wall Street's estimates yesterday when it reported record revenue, net income and earnings per share for its first quarter.

The Baltimore-based brokerage and money management firm posted net income of $32.8 million -- up 34 percent from $24.4 million reported for the corresponding period a year earlier. Diluted earnings per share in the three months ended June 30 increased 32 percent to 54 cents, beating average estimates by 7 cents a share, according to a survey of analysts by Zacks Investment Research.

Revenue climbed 26 percent from $248.7 million to $314.6 million, driven largely by investment-advisory and related fees, which grew to $123 million from $90.4 million in last year's first quarter. Revenue from commissions were $82 million vs. $65 million in the year-earlier quarter.

Assets under management grew 4 percent to $93 billion -- also a record.

"They certainly beat our expectations," said Lauren Smith, a senior analyst at Putnam, Lovell, de Guardiola and Thornton in New York, whose firm was also expecting to see diluted earnings per share of 47 cents. "If you look where the surprises were relative to our expectations, clearly investment advisory and related fees saw very, very strong growth."

Smith said her firm rates Legg stock a hold. "It's one of the best franchises out there, but on a relative basis it's just, in our view, trading at a fair-value range at this point," she said.

Raymond A. "Chip" Mason, chairman and chief executive, said: "Our strong results were attributable to significant growth in revenues in our investment advisory and securities brokerage business. Revenues from securities brokerage activities, fueled by a robust investment climate, and net interest profit were also important contributors to the company's outstanding results."

The revenue from brokerage activities was up 27 percent to $111 million.

Shares of Legg Mason rose 87.5 cents to $37.4375 yesterday.

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