The current global economic crisis, resulting from the coronavirus outbreak, has made people wary of investing in finance stocks. Nevertheless, strong fundamentals of BGC Partners, Inc. (BGCP - Free Report) suggest that it is a wise idea to add the stock to your portfolio now.
The Zacks Consensus Estimate for the company’s current-year earnings has been revised 4.8% upward over the past 30 days. The stock currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, shares of the company have lost 57.7% so far this year compared with a 25.6% decline recorded by the industry. However, strength in fundamentals and a favorable Zacks Rank suggest that the price performance will improve in the future.
Here are a few aspects that make BGC Partners an attractive investment option now.
Revenue Strength: The company continues to make steady progress toward improving its top line, which has witnessed a five-year (2015-2019) CAGR of 7.4%. Moreover, its projected sales growth rates of 7.2% and 4.4% for 2020 and 2021, respectively, indicate the continuation of the upward trend in revenues.
Earnings per Share (EPS) Growth: BGC Partners recorded EPS growth of 6.5% over the past three-five years. Moreover, its earnings are projected to grow 6.6% in 2020 (higher than the industry average of 2.6%) and 9.2% in 2021.
Superior Return on Equity (ROE): BGC Partners’ ROE is 35.49%, significantly higher than the industry’s average of 12.77%. This indicates that the company reinvests its cash more efficiently compared with the industry.
Reasonable Valuation: The company looks undervalued right now when compared with its broader industry. It currently has a price/earnings (P/E) (F1) ratio of 3.91, lower than the industry average of 8.78. Also, its price/sales (P/S) ratio of 0.42 compares favorably with the industry average of 1.01.
Moreover, the stock has a Value Score of B. The Value Style Score condenses all valuation metrics into one actionable score, which helps investors steer clear of 'value traps' and identify stocks that are truly trading at a discount. Our research shows that stocks, with the combination of a Value Score of A or B and a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Key Picks
Virtu Financial, Inc.’s (VIRT - Free Report) Zacks Consensus Estimate for current-year earnings has been revised upward by 61.5% over the past 60 days. The company currently sports a Zacks Rank #1.
The consensus estimate for earnings of Focus Financial Partners Inc. (FOCS - Free Report) has been revised 1.4% upward for the current year over the past 60 days. The company presently carries a Zacks Rank #2.
The consensus estimate for earnings of Gladstone Investment Corporation (GAIN - Free Report) for the current fiscal year has been unchanged over the past 60 days. The company currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>