Invesco trades at $28.26 per share and has stayed right on track with the overall market, gaining 8.5% over the last six months. At the same time, the S&P 500 has returned 4.7%.
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Why is Invesco not exciting?
We’re passing on Invesco for now. Here are two reasons you should be careful with IVZ, plus one stock we’d rather own.
1. Long-term revenue growth flatter than a pancake
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
Unfortunately, Invesco struggled to consistently increase demand as its $5.23 billion of revenue for the trailing 12 months was close to its revenue five years ago. This was below our standards and signals it’s a lower quality business.
2. EPS trending down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Invesco, its EPS declined by 2.3% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.
Final judgment
Invesco isn’t a terrible business, but it isn’t one of our picks. That said, the stock currently trades at 8.8× forward P/E (or $28.26 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We’re fairly confident there are better investments elsewhere. We’d recommend looking at a top digital advertising platform riding the creator economy.
Stocks we like more than Invesco
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