Yahoo Finance Solid AUM & Global Reach Aid Invesco (IVZ) Despite High Debt
Invesco IVZ is well poised for improvement on the back of solid assets under management (AUM), increased global presence and inorganic growth efforts. However, high level of debt and elevated expenses remain key concerns.
Driven by a solid AUM balance and strategic buyouts, the company’s net revenues have been improving. Net revenues witnessed a six-year (2014-2019) CAGR of 4.1%, with the momentum continuing in first-quarter 2020. Further, its diverse product offerings and solid retail channel, along with a robust institutional pipeline will keep attracting investors’ offerings, which will likely stoke growth.
Invesco is expanding operations in international markets through acquisitions and broad product diversification. Outside the United States, Invesco has a solid presence in Europe, Canada and the Asia-Pacific, which constituted 28.2% of the company’s client AUM as of Mar 31, 2020.
However, high level of debt will restrict it from procuring additional finance. As of Mar 31, 2020, Invesco’s long-term debt amounted to $2.6 billion (nearly 7% of total assets). Its total debt to total capital of more than 38% at the end of first-quarter 2020 was higher than the industry average of 26.59%. The times-interest-earned ratio, which currently stands at 7.43, declined sequentially in first-quarter 2020. This shows that the company has relatively higher credit risk.
Invesco, which had been actively involved in capital deployment activities in the past, slashed quarterly dividend by 50% and doesn’t foresee additional share buybacks this year on assumption of continuation of the current unfavorable operating backdrop.
The Zacks Consensus Estimate for earnings has moved 1% and 1.3% downward for 2020 and 2021, respectively, over the past 30 days. Shares of this Zacks Rank #3 (Hold) company have lost 49.1% so far this year compared with the industry’s 4.2% decline.
Stocks to Consider
TFS Financial Corporation’s TFSL earnings estimates for the ongoing year have been revised 1% upward in the past 60 days. This Zacks #1 Ranked (Strong Buy) stock has lost 11.3% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Prospect Capital Corporation PSEC witnessed an upward earnings estimate revision of 12.5% for the current year over the past 30 days. Its shares have lost 16.6% over the past year. At present, it sports a Zacks Rank of 1.
ESSA Bancorp, Inc.’s ESSA earnings estimates for 2020 have been upwardly revised by 5.5% over the past 30 days. Its shares have lost 13.4% over the past year. Currently, it sports a Zacks Rank of 1.
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Invesco Ltd. (IVZ) : Free Stock Analysis Report
TFS Financial Corporation (TFSL) : Free Stock Analysis Report
Prospect Capital Corporation (PSEC) : Free Stock Analysis Report
ESSA Bancorp, Inc. (ESSA) : Free Stock Analysis Report
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