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Invesco or T. Rowe Price: Which is a Better Stock for 2018?
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Invesco Ltd. (IVZ - Free Report) and T. Rowe Price Group, Inc. (TROW - Free Report) have market capitalization of $14.9 billion and $25.3 billion, respectively. These publicly-owned investment managers are influenced by the same economic backdrop as they have almost similar business operations.
The Zacks Industry Rank is #70 (top 26%) for the industry to which these companies belong. Our back-testing shows that the top 50% of the Zacks Ranked industries outperforms the bottom 50% by a factor of more than two to one.
In terms of price performance, Invesco’s shares have gained 20.4% in 2017 while T. Rowe Price’s shares have rallied 39.4%.
As both asset managers have similar business trends, a thorough research of their financials will help pick the potential winner.
Invesco
Invesco has a trailing 12-month return on equity (ROE) of 13.02% compared with the industry average of 12.92%. This shows that the company reinvests earnings more efficiently.
However, its debt/equity ratio of 0.75 is higher than the industry average of 0.11. This reflects that the company has a relatively higher debt burden and will not be financially stable during turbulent economic conditions.
Nonetheless, Invesco’s earnings are projected to grow 19.2% in 2017 and 10.2% in 2018. Also, the stock has a Growth Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential.
Additionally, sales are expected to increase 10.1% in 2017 and 8.5% in 2018. Invesco has a dividend yield of 3.19%, above the industry average of 2.25%.
Further, the stock is undervalued with respect to its price-to-earnings (P/E) and price-to-book value (P/B) ratios. It has a P/E ratio of 12.41 compared with the industry average of 12.76. Also, the company’s P/B of 1.73 is below the industry average of 1.92.
Invesco currently carries a Zacks Rank #2. Moreover, it has a Value Score of B and VGM Score of A.
T. Rowe Price
T. Rowe Price has a trailing 12-month ROE of 24.76% compared with the industry average of 12.92%. This shows that the company reinvests earnings more efficiently.
Also, its debt/equity ratio is 0.00 compared with the industry’s average of 0.09, which implies no debt burden. It highlights the financial strength of the company in an unstable economic environment.
T. Rowe Price’s earnings are projected to grow 33.5% in 2017 but decline at the rate of 2.8% in 2018. Additionally, sales are expected to increase 27.6% in 2017 and 7.1% in 2018. Nonetheless, the stock has a Growth Score of F.
The company has a dividend yield of 2.21%, below the industry average of 2.25%.
However, the stock is overvalued with respect to its price-to-earnings (P/E) and price-to-book value (P/B) ratios. It has a P/E ratio of 17.70 compared with the industry average of 12.76. Also, the company’s P/B of 4.52 is above the industry average of 1.92.
T. Rowe Price looks better positioned in terms of superior ROE and better leverage as well as higher earnings and sales growth expectations for 2017.However, Invesco’s favorable Style Scores and superior earnings and sales growth expectations for 2018 make it a better pick. Also, Invesco stock is undervalued.
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Invesco or T. Rowe Price: Which is a Better Stock for 2018?
Invesco Ltd. (IVZ - Free Report) and T. Rowe Price Group, Inc. (TROW - Free Report) have market capitalization of $14.9 billion and $25.3 billion, respectively. These publicly-owned investment managers are influenced by the same economic backdrop as they have almost similar business operations.
The Zacks Industry Rank is #70 (top 26%) for the industry to which these companies belong. Our back-testing shows that the top 50% of the Zacks Ranked industries outperforms the bottom 50% by a factor of more than two to one.
In terms of price performance, Invesco’s shares have gained 20.4% in 2017 while T. Rowe Price’s shares have rallied 39.4%.
As both asset managers have similar business trends, a thorough research of their financials will help pick the potential winner.
Invesco
Invesco has a trailing 12-month return on equity (ROE) of 13.02% compared with the industry average of 12.92%. This shows that the company reinvests earnings more efficiently.
However, its debt/equity ratio of 0.75 is higher than the industry average of 0.11. This reflects that the company has a relatively higher debt burden and will not be financially stable during turbulent economic conditions.
Nonetheless, Invesco’s earnings are projected to grow 19.2% in 2017 and 10.2% in 2018. Also, the stock has a Growth Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential.
Additionally, sales are expected to increase 10.1% in 2017 and 8.5% in 2018. Invesco has a dividend yield of 3.19%, above the industry average of 2.25%.
Further, the stock is undervalued with respect to its price-to-earnings (P/E) and price-to-book value (P/B) ratios. It has a P/E ratio of 12.41 compared with the industry average of 12.76. Also, the company’s P/B of 1.73 is below the industry average of 1.92.
Invesco currently carries a Zacks Rank #2. Moreover, it has a Value Score of B and VGM Score of A.
T. Rowe Price
T. Rowe Price has a trailing 12-month ROE of 24.76% compared with the industry average of 12.92%. This shows that the company reinvests earnings more efficiently.
Also, its debt/equity ratio is 0.00 compared with the industry’s average of 0.09, which implies no debt burden. It highlights the financial strength of the company in an unstable economic environment.
T. Rowe Price’s earnings are projected to grow 33.5% in 2017 but decline at the rate of 2.8% in 2018. Additionally, sales are expected to increase 27.6% in 2017 and 7.1% in 2018. Nonetheless, the stock has a Growth Score of F.
The company has a dividend yield of 2.21%, below the industry average of 2.25%.
However, the stock is overvalued with respect to its price-to-earnings (P/E) and price-to-book value (P/B) ratios. It has a P/E ratio of 17.70 compared with the industry average of 12.76. Also, the company’s P/B of 4.52 is above the industry average of 1.92.
T. Rowe Price has Value Score of D and VGM Score of C. The stock currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Our Take
T. Rowe Price looks better positioned in terms of superior ROE and better leverage as well as higher earnings and sales growth expectations for 2017.However, Invesco’s favorable Style Scores and superior earnings and sales growth expectations for 2018 make it a better pick. Also, Invesco stock is undervalued.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>