Rating Change #2
Invesco Ltd (IVZ) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- INVESCO LTD has improved earnings per share by 18.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, INVESCO LTD increased its bottom line by earning $1.57 versus $0.99 in the prior year. This year, the market expects an improvement in earnings ($1.89 versus $1.57).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Capital Markets industry average, but is less than that of the S&P 500. The net income increased by 15.5% when compared to the same quarter one year prior, going from $175.20 million to $202.30 million.
- Net operating cash flow has significantly increased by 8624.32% to $322.80 million when compared to the same quarter last year. In addition, INVESCO LTD has also vastly surpassed the industry average cash flow growth rate of 457.13%.
- After a year of stock price fluctuations, the net result is that IVZ's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- The debt-to-equity ratio is somewhat low, currently at 0.84, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.79 is somewhat weak and could be cause for future problems.
Invesco Ltd. is a publicly owned investment manager. The firm primarily provides its services to individuals, typically high net worth individuals. It also manages accounts for institutions. The firm manages separate client focused equity, fixed income, balanced portfolios. The company has a P/E ratio of 16.7, above the average financial services industry P/E ratio of 14.8 and below the S&P 500 P/E ratio of 17.7. Invesco has a market cap of $10.1 billion and is part of the financial sector and financial services industry. Shares are up 33.6% year to date as of the close of trading on Tuesday.You can view the full Invesco Ratings Report or get investment ideas from our investment research center.
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