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Stock Analyst Update

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Gabelli's earnings forecast may not be as good as it seems.


In a preview of its forthcoming earnings release, mutual fund advisor Gabelli Asset Management (GBL) announced Wednesday that it expects to report earnings of $0.44 per share for its first quarter, 10% higher than consensus Wall Street estimate of $0.40 per share. This would be Gabelli's second earnings surprise in a row.

It's unclear, however, how big of a boost Gabelli received from capital gains in the company's investment portfolio, which are nonrecurring. In its fourth quarter, for example, such non-operating income--principally capital gains on the company's portfolio--accounted for 20% of total income before taxes and other non-operating expenses. We won't know the full story until Gabelli releases its full earnings report, which is expected the week of May 15.

Shares of Gabelli rose 5/8, or 3.7%, to 17 1/2 on Wednesday.

Olivia Barbee does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.