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COHEN & STEERS, INC. 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Cohen & Steers Limited Duration

Filing date:

02/21/2025

TLDR:

Cohen & Steers experienced a slight increase in AUM and revenue, but faces risks related to market performance and competition. The overall assessment is a hold, pending further observation of AUM growth and expense management.

ELI5:

Cohen & Steers, a company that manages investments in real estate and other assets, made a bit more money but has some risks to watch out for. It’s like saying their business is doing okay, but it’s not a clear buy or sell right now.

Accession #:

0001284812-25-000087

Published on

Analyst Summary

  • AUM increased by 3.2% to $85.8 billion.
  • Total revenue increased by 5.7% to $517.4 million.
  • Total expenses increased by 6.0% to $344.5 million.
  • Operating margin decreased slightly to 33.4%.
  • Net liquid assets increased to $331.5 million.

Opportunities and Risks

  • Risk: Decline in Real Estate/Preferred Securities Performance.
  • Risk: Single Client Concentration (Daiwa Asset Management).
  • Risk: Seed Investment Losses.
  • Risk: Cybersecurity Risks.
  • Risk: Competition.
  • Risk: Interest Rate Risk.

Potential Implications

Company Performance

  • Monitor AUM trends, particularly in institutional accounts, to assess the impact of outflows.
  • Focus on controlling employee compensation and other operating expenses to improve profitability.
  • Closely monitor the performance of seed investments and their contribution to AUM growth.
  • Explore opportunities to diversify revenue sources and reduce reliance on a single client.
  • Continue to invest in cybersecurity measures to protect against potential breaches.
  • Stay informed about evolving regulations and their potential impact on the business.

SEC Filing Report: Cohen & Steers, Inc. (CNS) 10-K for Fiscal Year Ended December 31, 2024

Executive Summary

This report analyzes Cohen & Steers, Inc.’s (CNS) 10-K filing for the fiscal year ended December 31, 2024. CNS is a global investment manager specializing in real assets and alternative income. The company experienced a slight increase in AUM and revenue, but faces risks related to market performance, concentration in real estate and preferred securities, and competition. The overall assessment is a hold, pending further observation of AUM growth and expense management. Key recommendations include monitoring the performance of seed investments and the impact of regulatory changes.

Company Overview

Cohen & Steers, Inc. (CNS) is a global investment manager specializing in real assets and alternative income. Founded in 1986, the company is headquartered in New York City and has offices in London, Dublin, Hong Kong, Tokyo, and Singapore. CNS manages open-end funds, institutional accounts, and closed-end funds. The company’s core investment strategies include U.S. Real Estate Securities, Global/International Real Estate Securities, Preferred Securities, Global Listed Infrastructure, Global Natural Resource Equities, and Real Assets Multi-Strategy.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management’s narrative highlights the complex global economic conditions of 2024, characterized by varying growth levels across regions and adjustments to new political administrations. They emphasize navigating these conditions through portfolio management expertise, risk management, and cost control. The tone is cautiously optimistic, acknowledging challenges while highlighting investment opportunities. A key point is the concentration of AUM in real estate securities strategies.

Financial Statement Analysis

Assets Under Management (AUM)

AUM increased by 3.2% to $85.8 billion at December 31, 2024, from $83.1 billion at December 31, 2023. This increase was primarily driven by market appreciation, partially offset by net outflows and distributions.

Investment Vehicle AUM (Dec 31, 2024) AUM (Dec 31, 2023) Change
Open-end Funds $41.0B $37.0B +10.6%
Institutional Accounts $33.6B $35.0B -4.2%
Closed-end Funds $11.3B $11.1B +1.9%

* Open-end Funds: Significant net inflows, particularly into U.S. real estate.
* Institutional Accounts: Net outflows, especially from global/international real estate.
* Closed-end Funds: Modest increase due to market appreciation.

Revenue

Total revenue increased by 5.7% to $517.4 million in 2024 from $489.6 million in 2023, driven by higher average AUM.

Revenue Source 2024 2023 Change
Investment advisory and administration fees $487.1M $459.4M +6.0%
Distribution and service fees $28.1M $28.2M -0.2%
Other $2.2M $2.0M +9.4%

Expenses

Total expenses increased by 6.0% to $344.5 million in 2024 from $325.2 million in 2023.

Expense Category 2024 2023 Change
Employee compensation and benefits $218.0M $200.2M +8.9%
Distribution and service fees $57.1M $54.2M +5.5%
General and administrative $60.1M $66.7M -9.8%
Depreciation and amortization $9.3M $4.1M +126.3%

* Employee compensation increased due to higher amortization of restricted stock units.
* General and administrative expenses decreased due to lower rent expense.
* Depreciation and amortization increased due to the new headquarters.

Profitability

Operating margin decreased slightly to 33.4% in 2024 from 33.6% in 2023. As adjusted operating margin also decreased from 36.2% to 35.4%.

Liquidity and Capital Resources

The company maintains a highly liquid balance sheet. Net liquid assets increased to $331.5 million at December 31, 2024, from $285.5 million at December 31, 2023. The company has a $100 million senior unsecured revolving credit facility maturing on January 20, 2026.

Risk Factors

The filing highlights several key risk factors:

* Decline in Real Estate/Preferred Securities Performance: A significant portion of AUM is concentrated in these strategies, making the company vulnerable to sector-specific downturns.
* Single Client Concentration: A substantial portion of revenue is derived from a single institutional client (Daiwa Asset Management).
* Seed Investment Losses: Seed investments in new strategies can expose the company to potential losses.
* Cybersecurity Risks: Failure to implement effective information security policies could lead to financial losses and reputational harm.
* Competition: The investment management industry is highly competitive, and investors are increasingly fee-sensitive.
* Interest Rate Risk: Changes in interest rates, particularly increases, can negatively impact real estate and preferred securities strategies.

Uncommon Metrics

The filing mentions seed investments, which are important for launching new strategies. The success of these investments is crucial for future growth. The company’s ability to manage costs associated with expanding its business is also a key factor.

Comparative & Trend Analysis

* Historical Comparison: Revenue and AUM have fluctuated over the past three years, reflecting market volatility.
* Peer Comparison: The filing does not provide specific peer comparisons, but it acknowledges competition from larger firms with greater resources.

Conclusion & Actionable Insights

Cohen & Steers demonstrated resilience in 2024, achieving modest AUM and revenue growth despite challenging market conditions. However, the company faces significant risks, including concentration in specific asset classes and reliance on a single large client.

* Overall Assessment: Hold. The company’s performance is stable, but the risks warrant caution.
* Recommendations:
* Monitor AUM Growth: Track AUM trends, particularly in institutional accounts, to assess the impact of outflows.
* Manage Expenses: Focus on controlling employee compensation and other operating expenses to improve profitability.
* Evaluate Seed Investments: Closely monitor the performance of seed investments and their contribution to AUM growth.
* Diversify Revenue Streams: Explore opportunities to diversify revenue sources and reduce reliance on a single client.
* Address Cybersecurity Risks: Continue to invest in cybersecurity measures to protect against potential breaches.
* Monitor Regulatory Changes: Stay informed about evolving regulations and their potential impact on the business.

Financial Analysis of Cohen & Steers (CNS) – 2024

1. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin:

    • Calculation: (Revenue – Expenses) / Revenue = ($517,417 – $344,540) / $517,417 = 33.4%
    • Trend: 33.4% (2024) vs. 33.6% (2023). Percentage Change: -0.6%
    • Industry: The asset management industry typically has high gross profit margins, often exceeding 50%, due to the nature of the business (managing assets rather than producing goods). CNS’s gross profit margin is lower than the industry average.
  • Operating Profit Margin:

    • Calculation: Operating Income / Revenue = $172,877 / $517,417 = 33.4%
    • Trend: 33.4% (2024) vs. 33.6% (2023). Percentage Change: -0.6%
    • Industry: A good operating margin for asset managers is typically above 30%. CNS’s operating margin is in line with this benchmark.
  • Net Profit Margin:

    • Calculation: Net Income Attributable to Common Stockholders / Revenue = $151,265 / $517,417 = 29.2%
    • Trend: 29.2% (2024) vs. 26.4% (2023). Percentage Change: 10.6%
    • Industry: A net profit margin of 15-25% is considered healthy for asset management firms. CNS’s net profit margin is above this range.
  • Return on Assets (ROA):

    • Calculation: Net Income / Total Assets = $162,792 / $812,366 = 20.0%
    • Industry: An ROA above 5% is generally considered good. CNS’s ROA is very strong.
  • Return on Equity (ROE):

    • Calculation: Net Income Attributable to Common Stockholders / Total Stockholders’ Equity Attributable to Cohen & Steers, Inc. = $151,265 / $511,711 = 29.6%
    • Industry: An ROE of 15-20% is considered good. CNS’s ROE is very strong.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Basic EPS: $3.00
    • Diluted EPS: $2.97
    • Trend: Basic EPS: $3.00 (2024) vs. $2.62 (2023). Percentage Change: 14.5%
    • Trend: Diluted EPS: $2.97 (2024) vs. $2.60 (2023). Percentage Change: 14.2%
    • Industry: EPS varies widely based on the size and profitability of the firm.

Liquidity

  • Current Ratio:

    • Calculation: Current Assets / Current Liabilities. Current Assets = Cash and cash equivalents + Investments + Accounts receivable + Due from brokers + Other assets = $182,974 + $335,377 + $74,389 + $1,474 + $31,592 = $625,806. Current Liabilities = $105,396. Current Ratio = $625,806 / $105,396 = 5.94
    • Trend: 5.94 (2024) vs. $187,442 + $258,970 + $68,889 + $4,677 + $27,543 / $106,603 = 5.05 (2023). Percentage Change: 17.6%
    • Industry: A current ratio of 1.5 to 2 is generally considered healthy. CNS’s current ratio is very high, indicating strong liquidity.
  • Quick Ratio (Acid-Test Ratio):

    • Calculation: (Current Assets – Inventory) / Current Liabilities. Since inventory is not applicable, we will subtract investments. ($625,806 – $335,377) / $105,396 = 2.75
    • Trend: 2.75 (2024) vs. ($547,521 – $258,970) / $106,603 = 2.71 (2023). Percentage Change: 1.5%
    • Industry: A quick ratio above 1 is generally considered good. CNS’s quick ratio is strong.
  • Cash Ratio:

    • Calculation: (Cash and Cash Equivalents) / Current Liabilities = $182,974 / $105,396 = 1.74
    • Trend: 1.74 (2024) vs. $187,442 / $106,603 = 1.76 (2023). Percentage Change: -1.1%
    • Industry: A cash ratio above 1 is considered very strong. CNS’s cash ratio is excellent.

Solvency/Leverage

  • Debt-to-Equity Ratio:

    • Calculation: Total Liabilities / Total Stockholders’ Equity = $237,463 / $521,443 = 0.46
    • Trend: 0.46 (2024) vs. $243,907 / $386,184 = 0.63 (2023). Percentage Change: -26.9%
    • Industry: A debt-to-equity ratio below 1 is generally considered healthy. CNS’s debt-to-equity ratio is low, indicating low leverage.
  • Debt-to-Assets Ratio:

    • Calculation: Total Liabilities / Total Assets = $237,463 / $812,366 = 0.29
    • Trend: 0.29 (2024) vs. $243,907 / $736,554 = 0.33 (2023). Percentage Change: -12.1%
    • Industry: A debt-to-assets ratio below 0.5 is generally considered healthy. CNS’s debt-to-assets ratio is low.
  • Interest Coverage Ratio (Times Interest Earned):

    • Calculation: Operating Income / Interest Expense. Interest expense is not explicitly listed, so we will use interest and dividend income as a proxy. $172,877 / $19,344 = 8.94
    • Industry: An interest coverage ratio above 1.5 is generally considered safe. CNS’s interest coverage ratio is very high.

Activity/Efficiency

  • Asset Turnover:

    • Calculation: Revenue / Total Assets = $517,417 / $812,366 = 0.64
    • Trend: 0.64 (2024) vs. $489,637 / $736,554 = 0.66 (2023). Percentage Change: -3.0%
    • Industry: Asset turnover varies widely in the asset management industry.

Valuation

  • Price-to-Earnings Ratio (P/E):

    • Calculation: Stock Price / EPS = $86.33 / $2.97 = 29.1
    • Industry: The average P/E ratio for the asset management industry is around 15-25. CNS’s P/E ratio is higher than the industry average.
  • Price-to-Book Ratio (P/B):

    • Calculation: Market Cap / Book Value of Equity. Book Value of Equity = $521,443 (in thousands). Market Cap = Shares Outstanding * Stock Price = (50,574,641) * $86.33 = $4,366,938,000 = $4,366,938 (in thousands). P/B = $4,366,938 / $521,443 = 8.37
    • Industry: A P/B ratio between 1 and 3 is considered a good value. CNS’s P/B ratio is higher than the industry average.
  • Price-to-Sales Ratio (P/S):

    • Calculation: Market Cap / Revenue = $4,366,938 / $517,417 = 8.44
    • Industry: A P/S ratio below 2 is considered good. CNS’s P/S ratio is higher than the industry average.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Calculation: EV / EBITDA. EV = Market Cap + Total Debt – Cash. Total Debt is not explicitly listed, so we will use total liabilities. EBITDA = Net Income + Interest + Taxes + Depreciation and Amortization = $162,792 + $19,344 + $46,749 + $9,288 = $238,173. EV = $4,366,938 + $237,463 – $182,974 = $4,421,427. EV/EBITDA = $4,421,427 / $238,173 = 18.56
    • Industry: An EV/EBITDA between 10 and 15 is considered a good value. CNS’s EV/EBITDA ratio is higher than the industry average.

Growth Rates

  • Revenue Growth:

    • Calculation: ($517,417 – $489,637) / $489,637 = 5.7%
  • Net Income Growth:

    • Calculation: ($162,792 – $136,609) / $136,609 = 19.2%
  • EPS Growth:

    • Calculation: ($2.97 – $2.60) / $2.60 = 14.2%

Other Relevant Metrics

  • Assets Under Management (AUM):

    • Total AUM increased from $83.136 billion in 2023 to $85.814 billion in 2024, a growth of 3.2%. This indicates the company’s ability to attract and retain assets.
  • Non-GAAP Metrics (As Adjusted):

    • The company presents “As Adjusted” net income and EPS, which exclude certain items like seed investments, accelerated vesting of restricted stock units, lease transition costs, and tax adjustments. These adjustments provide a view of the company’s recurring earnings.
    • The adjustments seem reasonable as they remove non-recurring items, but investors should always be cautious about non-GAAP metrics and compare them to GAAP results.

2. Commentary

Cohen & Steers demonstrated a mixed financial performance in 2024. Revenue increased modestly, while net income and EPS showed stronger growth, indicating improved profitability. The company maintains a strong liquidity position and low leverage. Valuation ratios suggest the company may be overvalued compared to industry averages. AUM growth was positive, reflecting the company’s ability to attract and retain assets.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️