Long-established in the Asset Management industry, Invesco Ltd (IVZ, Financial) has built a stellar reputation over the years. Recently, the company experienced a daily gain of 1.45%, alongside a three-month change of 15.37%. Despite these gains, the latest insights from the GF Score suggest potential challenges ahead. Key metrics such as financial strength, growth, and valuation indicate that Invesco Ltd may not maintain its historical performance levels. This article delves into these critical factors to uncover the evolving narrative of Invesco Ltd.
What Is the GF Score?
The GF Score is a proprietary stock performance ranking system developed by GuruFocus. It evaluates stocks based on five key aspects: financial strength, profitability, growth, valuation, and momentum. These aspects have been closely correlated with long-term stock performance from 2006 to 2021. Stocks with higher GF Scores typically yield higher returns. The GF Score ranges from 0 to 100, with 100 representing the highest potential for outperformance.
- Financial strength rank: 5/10
- Profitability rank: 7/10
- Growth rank: 1/10
- GF Value rank: 3/10
- Momentum rank: 7/10
Based on these metrics, GuruFocus assigned Invesco Ltd a GF Score of 67 out of 100, signaling a cautious outlook on its future outperformance potential.
Understanding Invesco Ltd's Business
Invesco Ltd provides investment-management services to both retail (66% of managed assets) and institutional clients (34%). As of August 2024, the firm managed $1.752 trillion across various asset classes including equity, balanced funds, fixed-income, alternative investments, and money markets. Notably, passive products comprise 42% of Invesco's total assets under management (AUM), highlighting its significant role in the equity and fixed-income sectors. Despite its strong presence in the US, Invesco also has a substantial footprint internationally, with 28% of its AUM coming from Europe, Africa, the Middle East, and Asia.
Financial Strength Breakdown
Invesco Ltd's financial strength raises concerns, particularly with an interest coverage ratio of 0, indicating potential difficulties in managing interest expenses on debt. This ratio is significantly lower than industry standards, where a minimum of five is preferred. Furthermore, the company's Altman Z-Score of 1.04 falls below the distress threshold, suggesting possible financial distress in the near future. The cash-to-debt ratio at 0.2 and a debt-to-Ebitda ratio of 5.82 further underscore the company's challenging debt situation.
Growth Prospects
Invesco Ltd's growth metrics are equally troubling. The company's revenue has declined by an average of 1.9% annually over the past three years, underperforming 54.13% of its peers in the Asset Management industry. This stagnation is reflected in the company's EBITDA, which has also seen declines over the past five years. With a predictability rank of just one star, the future revenue and earnings consistency remain uncertain.
Conclusion
Considering Invesco Ltd's financial strength, profitability, and growth metrics, the GF Score highlights the firm's challenging position for potential underperformance. Investors seeking more robust investment opportunities may consider exploring other companies with higher GF Scores using the GF Score Screen available to GuruFocus Premium members.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
