Lower price-to-earnings ratio
Invesco (IVZ) has a price-to-earnings ratio of 10.77x on an NTM (next-12-month) basis compared to the peer average, which stood at 16.56x. Thus, Invesco has discounted valuations. Its competitors, which include Raymond James Financial (RJF), Lazard Limited (LAZ), and WisdomTree Investments (WETF) have price-to-earnings ratios on an NTM basis of 12.68x, 12.34x, and 24.67x, respectively.
From February 1, 2018, to February 21, 2018, the S&P 500 fell 4.3%, which could negatively impact Invesco’s total assets under management and lead to a further fall in the company’s valuations.
In 4Q17, Invesco paid $118.9 million in the form of dividends. Including this amount, the company rewarded shareholders with $471.6 million of cash dividends in 2017. The company has been rewarding its shareholders with the same quarterly payouts for the past few quarters.
In October 2017, Invesco declared $0.29 per share of a quarterly dividend, and on January 30, 2018, it declared a quarterly dividend of the same amount. Invesco needs to raise its quarterly payouts to attract the attention of market participants. The company’s adjusted operating margin stood at 39.4% in 2017 compared to 38.7% in 2016.
Invesco’s price-to-earnings ratio on an LTM (last-12-month) basis stood at 13.66x, and peers (XLF) like Raymond James Financial (RJF), Lazard Limited (LAZ), and WisdomTree Investments (WETF) have 18.58x, 27.88x and 51.38x, respectively, on an LTM basis.