Why Don't More Analysts Think Invesco (IVZ) Is a Buy?

Invesco may be undervalued with mixed growth prospects, but the 12 analysts following the company give it an rating of hold. Their target prices range from $15.0 to $21.0 per share, for an average of $17.88. At today's price of $17.03, Invesco is trading -4.75% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.

Invesco Ltd. is a publicly owned investment manager. Based in Atlanta, GA, the mid-cap Finance company has 8,611 full time employees. Invesco has not offered a regular dividend during the last year.

Invesco has a trailing twelve month P/E ratio of 12.3, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of 1.95, the company has a forward P/E ratio of 8.7.

The average compound growth rate of the company's historical and projected earnings per share is 8.8%. On this basis, the company's PEG ratio is 1.38, which shows that it is fairly priced.

Furthermore, the market is potentially undervaluing Invesco in terms of its book value because its P/B ratio is 0.7. In comparison, the sector average P/B ratio is 1.57. The company's shares are currently -44.5% below their Graham number, indicating that its shares have a margin of safety.

So why are analysts giving IVZ a bad rating? We believe analysts could be alarmed by the company's disappointing -8.5% rate of cash flow growth over the last 4 years. You can see for yourself in the financial summary table below:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $6,117 $6,146 $6,894 $6,049
Revenue Growth n/a 0.46% 12.19% -12.26%
Operating Margins 24.2% 21.4% 25.0% 22.1%
Operating Margins Growth n/a -11.57% 16.82% -11.6%
Earnings Per Share $1.28 $1.13 $2.99 $1.38
EPS Growth n/a -11.72% 164.6% -53.85%
Diluted Shares (MM) 440 462 466 458
Free Cash Flow (MM) $992 $1,230 $1,078 $696
FCF Growth n/a 23.98% -12.37% -35.42%
Capital Expenditures (MM) -$124 -$115 -$109 -$193
Net Debt / EBITDA 5.87 5.31 3.17 4.86
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.