Long-established in the Asset Management industry, Invesco Ltd (IVZ, Financial) has built a stellar reputation over the years. Despite this, recent market activities have shown a daily loss of 0.72%, alongside a more positive three-month change of 15.56%. However, insights from the GF Score indicate potential challenges ahead. With lower rankings in critical areas such as financial strength, growth, and valuation, Invesco Ltd may struggle to maintain its historical performance levels. This article delves into these key metrics 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 factors are closely correlated with long-term stock performance, as evidenced by backtesting data from 2006 to 2021. A higher GF Score generally indicates a higher potential for future returns. The GF Score ranges from 0 to 100, with 100 representing the highest potential.
- Financial strength rank: 5/10
- Profitability rank: 7/10
- Growth rank: 1/10
- GF Value rank: 3/10
- Momentum rank: 8/10
Based on these metrics, GuruFocus has assigned Invesco Ltd a GF Score of 67 out of 100, signaling a challenging outlook for future outperformance.
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 in assets, distributed across various categories including equity, balanced, fixed-income, alternative investments, and money markets. Notably, passive products constitute 42% of Invesco's total AUM. Despite its significant presence in the U.S., Invesco also has a substantial footprint internationally, with 28% of its AUM coming from Europe, Africa, the Middle East, and Asia.
Financial Strength and Challenges
Invesco Ltd's financial strength raises some concerns, particularly when looking at its interest coverage ratio of 0, which is significantly lower than industry standards. This ratio, which measures a company's ability to handle its interest expenses, is a critical indicator of financial health. Furthermore, the company's Altman Z-Score of 1.05 falls below the distress threshold, suggesting potential 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 challenges in managing debt.
Growth Prospects
The growth outlook for Invesco Ltd is also tepid, with a Growth rank of 1/10. The company's revenue has declined by an average of 1.9% per year over the past three years, underperforming 54.12% of its peers in the Asset Management industry. This stagnation is concerning in a rapidly evolving market. Additionally, EBITDA growth rates of -6.5 over three years and -1.3 over five years highlight profitability challenges.
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.
