It seems to be a wise idea to add Eaton Vance Corp. (EV - Free Report) stock to your portfolio now amid the coronavirus pandemic, considering the strength in its fundamentals and solid prospects. Moreover, its steady capital-deployment activities make it attractive for investors.
Further, analysts are bullish on the stock. In the past seven days, the Zacks Consensus Estimate for earnings has moved 4.1% and 10% upward for fiscal 2020 and 2021, respectively. The company currently carries a Zacks Rank #2 (Buy).
Shares of Eaton Vance have lost 1.3% in the past 12 months against the industry's 13.8% rise.
Factors That Make Eaton Vance a Solid Pick
Earnings Growth: Over the past three to five years, Eaton Vance has recorded earnings growth of 13.3%, higher than the industry average of 8.1%. Though fiscal 2020 earnings are expected to decline 4.6%, the same is projected to increase 3.3% in fiscal 2021.
Moreover, the company has impressive earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in three of the last four quarters and matched in one. It has a trailing four-quarter earnings surprise of 6.5%, respectively.
Also, the company has a Growth Score of A. Our research shows that stocks with the combination of a Style Score of A or B, and a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Revenue Strength: Eaton Vance’s total net revenues have witnessed a CAGR of 7.8% over the last four fiscal years (2016-2019). Also, its assets under management (AUM) witnessed a CAGR of 13.9% during the same time frame.
Moreover, Eaton Vance’s diverse product offerings and investment strategies will continue to attract investors, which along with the improving AUM balance, are likely to continue driving revenues.
Although sales are expected to decline marginally in fiscal 2020, the same is expected to record growth of 3.5% for fiscal 2021.
Steady Capital-Deployment Activities: The company is committed toward enhancing shareholders’ value. In October 2019, the company announced a dividend hike for the 39th consecutive fiscal year. As of Jul 31, 2020, nearly 4 million shares remained available under the buyback authorization. Given decent earnings strength, the company will likely be able to sustain capital-deployment plans.
Superior ROE: Eaton Vance’s trailing 12-month return on equity (ROE) highlights its growth potential. The company’s ROE of 31.17% compares favorably with the industry’s 11.91%, underlining that it is more efficient in using shareholder funds than its peers.
Favorable VGM Score: Eaton Vance has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Other Stocks to Consider
Artisan Partners Asset Management Inc. (APAM - Free Report) has witnessed an upward earnings estimate revision of 27.2% for 2020 over the past 60 days. Its shares have gained 29% so far this year. At present, it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
BrightSphere Investment Group Inc. (BSIG - Free Report) recorded an upward earnings estimate revision of 17.4% for the current year in the past 60 days. Its shares have appreciated 38% so far this year. It currently flaunts a Zacks Rank of 1.
T. Rowe Price Group, Inc. (TROW - Free Report) has witnessed 19.3% upward earnings estimate revision for the ongoing year in the past 60 days. Its shares have appreciated 16.1% so far this year. It currently flaunts a Zacks Rank of 1.
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