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Here's Why You Should Add Envestnet (ENV) to Your Portfolio

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Envestnet, Inc. (ENV - Free Report) continues to benefit from its solid asset-based and subscription-based recurring revenue generation capacity. Recent acquisitions of PortfolioCenter and PIE tech have started contributing to the top line.

The company is focused on technology development to improve operational efficiency, increase market competitiveness, address regulatory demands and cater to client-driven requests for new capabilities. Its technology design allows for significant scalability.

Envestnet’s recently released (on Nov 7) third-quarter 2019 earnings report bears evidence of this encouraging picture. Quarterly adjusted EPS came in at 60 cents beating the consensus mark by 3.4% and increasing 13% year over year. Revenues of $236.1 million surpassed the consensus mark by 0.9% and increased 16% year over year.

Envestnet, Inc Revenue (TTM)

 

The company’s raised revenue and earnings guidance for 2019 lifted investors optimism on the stock. Envestnet currently expects full-year revenues between $896.5 million and $898 million, compared with the previous expectation of $888.5-$894.5 million. The Zacks Consensus Estimate is pegged at $905.2 million.

Adjusted revenues are anticipated between $905.5 and $907 million, compared with the previous guidance of $897-$903 million. Adjusted net revenues are projected in the range of $661.5 million to $663.5 million, compared with $656 million to $663 million expected earlier.

Adjusted EPS is expected to be $2.14, compared with the prior guidance of $2.10 to $2.12. The Zacks Consensus Estimate is pegged at $2.14. The company anticipates adjusted EBITDA in the range of $192 million to $193 million, compared with the prior expectation of $191.5 million to $193 million.

Shares have added 1.7% from the date of its earnings release, outperforming the 1% gain for the industry it belongs to.

More Details on Quarterly Numbers

Adjusted revenues of $239.3 million increased 18% year over year. Adjusted net revenues grew 20% to $175 million.

Asset-based recurring revenues of $ 126.6 million increased 6% year over year, representing 54% of total revenues. Subscription-based recurring revenues of $100.6 million were up 32% from the prior-year period, representing 43% of total revenues. Professional services and other non-recurring revenues increased 13% year over year to $8.9 million. PortfolioCenter and PIEtech acquisitions contributed revenues of $2.4 million and $11.5 million, respectively.

Adjusted EBITDA came in at $54.5 million, up 28% year over year. Adjusted net income of $32.4 million increased 28%.

Envestnet ended the quarter with cash and cash equivalent balance of $71.6 million, compared with $77.7 million at the end of the prior quarter. Total debt was $618 million. The company generated around $59.5 million of cash from operating activities and CapEx was $7.3 million.

Q4 Outlook

Envestnet expects revenues between $236.5 million and $238 million and the current Zacks Consensus Estimate currently stands at $239.7 million. Adjusted revenues are anticipated between $238.5 million and 240 million. Adjusted net revenues are expected in the range of $173 million to $175 million. The company projects adjusted EBITDA in the range of $60 million to $61 million. Adjusted EPS is anticipated to be 68 cents, above the current Zacks Consensus Estimate of 67 cents.

Zacks Rank & Other Stocks to Consider

Envestnet currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Zacks Business Services sector are Global Payments (GPN - Free Report) , Mastercard (MA - Free Report) and Cardtronics . While Global Payments sports a Zacks Rank #1, Mastercard and Cardtronics carry a Zacks Rank #2.

Long-term expected EPS (three to five years) growth rate for Global Payments, Mastercard and Cardtronics is 17%, 16% and 4%, respectively.

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