DST shares fall after favorable earnings report

07/25/2013 5:28 PM

07/25/2013 5:28 PM

Shares of DST Systems Inc. fell Thursday after the company announced quarterly earnings that analysts viewed favorably.

The stock lost $1.53, or 2.1 percent, and closed at $69.83.

Investments added to second-quarter profits, DST said, though less than they had a year ago.

The Kansas City-based financial services company said it earned $78.5 million, or $1.77 a share, in April, May and June. A year earlier, DST earned $144.9 million, or $3.17 a share, largely from its sale of a privately held company in which it had invested.

DST showed more revenue growth than had been expected, said a note from David Koening, an analyst at Robert W. Baird & Co.

Peter Heckmann, who follows DST for AvondalePartners LLC, said the company reported progress in two of three areas he was watching, including growth and selling assets. DST failed to report winning new clients, Heckmann said in a note to clients.

DST said its profits benefited from $174.5 million in proceeds from investments before taxes. A year ago, such proceeds totaled $274.6 million.

The recent total included $12.1 million in pretax gains from selling shares of State Street Corp., a publicly held company that DST does business with. DST also collected a $125 million dividend from its investment in Boston Financial Data Services, a joint venture of DST and State Street.

Ignoring the investment gains and other one-time items, DST said it earned $46.3 million in the second quarter, compared with $35.4 million in the same period a year ago.

DST said its mutual fund record-keeping business grew by 700,000 accounts to 95.7 million. DST also began reporting a health care segment, which posted $82 million in revenues and includes its Kansas City-based pharmacy claims processing business called Argus Health Systems.

Total revenues were $657.1 million in the quarter, up from $632.8 million a year earlier.


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