Invesco Ltd. Stock Buy Recommendation Reiterated (IVZ)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Invesco (NYSE: IVZ) has been reiterated by TheStreet Ratings as a buy with a ratings score of A-. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • IVZ's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 9.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 55.39% to $501.60 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 -121.89%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • INVESCO LTD's earnings per share declined by 20.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, INVESCO LTD reported lower earnings of $1.50 versus $1.57 in the prior year. This year, the market expects an improvement in earnings ($2.08 versus $1.50).
  • The gross profit margin for INVESCO LTD is rather low; currently it is at 24.70%. Regardless of IVZ's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, IVZ's net profit margin of 14.52% compares favorably to the industry average.

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. Invesco has a market cap of $14.0 billion and is part of the financial sector and financial services industry. The company has a P/E ratio of 20.00, above the S&P 500 P/E ratio of 18.00. Shares are up 21.9% year to date as of the close of trading on Thursday.

You can view the full Invesco Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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