Estimates have been rising for Invesco Ltd. ( IVZ - Analyst Report ) after the company reported better than expected results for the fourth quarter of 2011. It is a Zacks #2 Rank (Buy).

Analysts believe that Invesco is well-positioned to benefit from retail investors shifting back into equity products, especially given the low interest rate environment over the new few years.

In addition to strong earnings growth potential, the company pays a dividend that yields 2.1%. Valuation is attractive too with shares trading at just 1.0x book value.

Company Description

Invesco is a global investment management firm with over $625 billion in assets under management and offices in more than 20 countries. It is headquartered in Atlanta, Georgia and has a market of $10.4 billion.

Fourth Quarter Results

Invesco reported better than expected results for the fourth quarter of 2011 on January 26. Earnings per share came in at 42 cents, beating the Zacks Consensus Estimate by a penny.

Net revenues rose 2% from the previous quarter to $717 million due to increases in performance fees. Assets under management at the end of the period increased 4.5% to $625.3 billion.

Adjusted operating income was essentially flat from the prior quarter due in part to higher employee compensation.

Outlook

The majority of analysts raised their estimates for both 2012 and 2013 following solid Q4 results. This sent the stock to a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2012 is now $1.83, representing 9% growth over 2011 EPS. The 2013 consensus estimate is currently $2.16, corresponding with 18% EPS growth.

Analysts expect the company to benefit from retail investors shifting back into equities given the lack of return in alternatives, such as cash or bonds.

Dividend

In addition to strong earnings growth, Invesco pays a dividend that yields a solid 2.1%.

Its dividend has been a bit lumpy over the last decade, but it has risen overall at a compound annual rate of 4%:

Valuation

The valuation picture looks attractive for IVZ with shares trading at just 1.0x book value, below the industry median of 1.3x, and below its 10-year median of 1.5x.

It also trades at just 12.9x 2012 earnings, below its 10-year median of 14.6x. It sports a PEG ratio of 1.1 based on a 5-year EPS growth rate of 11.7%.

The Bottom Line

With rising estimates, strong EPS growth potential, a 2.1% dividend and reasonable valuation, Invesco offers attractive total return potential.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor.