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Reasons to Retain Envestnet (ENV) Stock Amid Coronavirus Woes
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Shares of Envestnet, Inc. (ENV - Free Report) have gained 5.8% year to date, against 0.1% decline of the industry it belongs to.
The company is benefiting from its recurring revenue generation capacity and increased focused on digital, predictive analysis, outsourcing, and strategic partnerships amid the coronavirus crisis.
Envestnet Positioned to Recover Quickly Post Pandemic
Envestnet’s business model ensures solid asset-based and subscription-based recurring revenue generation capacity and therefore a steady revenue stream. Recurring revenues in the first quarter of 2020 came in at $239.4 million, up 24.7% year over year and constituting 97% of total revenues.
The company is preparing for business in a post-pandemic world that will be characterized by digital transformation, which will improve operational efficiency and facilitate the time to market. It recently launched Envestnet Connect, an AI-based centralized app that generates data-driven information relevant to a client’s specific needs.
The app, developed in partnership with AdvisorStream and Apprise Labs, is aimed at digitally strengthening advisor-client relationship by integrating clients’ personal household financial data with news content relevant to their values and financial position.
The move is an example of the company’s elevated focus on digital engagement, data and strategic partnership that can boost its ability to quickly and efficiently meet customer expectations in the post-COVID-19 world.
Some Risks
Envestnet has a debt-laden balance sheet. Total debt at the end of first-quarter 2020 was $697 million, up from the $668 million recorded at the end of the prior quarter. The total debt to total capital ratio of 0.45 was higher than the previous quarter’s 0.44. Increasing debt-to capital-ratio indicates that the proportion of debt to finance the company’s assets is on the rise. Higher debt as a percentage of total capital indicates a higher risk of insolvency.
Further, cash and cash equivalent balance of $69 million at the end of the first quarter was well below the debt level, underscoring that the company doesn’t have enough cash to meet this debt burden.
Zacks Rank and Stocks to Consider
Envestnet currently carries a Zacks Rank #3 (Hold).
The long-term expected earnings per share (three to five years) growth rate for H&R Block, SPS Commerce and SailPoint is 10%, 15% and 15% respectively.
5 Stocks to Soar Past the Pandemic:In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
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Reasons to Retain Envestnet (ENV) Stock Amid Coronavirus Woes
Shares of Envestnet, Inc. (ENV - Free Report) have gained 5.8% year to date, against 0.1% decline of the industry it belongs to.
The company is benefiting from its recurring revenue generation capacity and increased focused on digital, predictive analysis, outsourcing, and strategic partnerships amid the coronavirus crisis.
Envestnet Positioned to Recover Quickly Post Pandemic
Envestnet’s business model ensures solid asset-based and subscription-based recurring revenue generation capacity and therefore a steady revenue stream. Recurring revenues in the first quarter of 2020 came in at $239.4 million, up 24.7% year over year and constituting 97% of total revenues.
Envestnet, Inc Revenue (TTM)
Envestnet, Inc revenue-ttm | Envestnet, Inc Quote
The company is preparing for business in a post-pandemic world that will be characterized by digital transformation, which will improve operational efficiency and facilitate the time to market. It recently launched Envestnet Connect, an AI-based centralized app that generates data-driven information relevant to a client’s specific needs.
The app, developed in partnership with AdvisorStream and Apprise Labs, is aimed at digitally strengthening advisor-client relationship by integrating clients’ personal household financial data with news content relevant to their values and financial position.
The move is an example of the company’s elevated focus on digital engagement, data and strategic partnership that can boost its ability to quickly and efficiently meet customer expectations in the post-COVID-19 world.
Some Risks
Envestnet has a debt-laden balance sheet. Total debt at the end of first-quarter 2020 was $697 million, up from the $668 million recorded at the end of the prior quarter. The total debt to total capital ratio of 0.45 was higher than the previous quarter’s 0.44. Increasing debt-to capital-ratio indicates that the proportion of debt to finance the company’s assets is on the rise. Higher debt as a percentage of total capital indicates a higher risk of insolvency.
Further, cash and cash equivalent balance of $69 million at the end of the first quarter was well below the debt level, underscoring that the company doesn’t have enough cash to meet this debt burden.
Zacks Rank and Stocks to Consider
Envestnet currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are H&R Block (HRB - Free Report) , SPS Commerce (SPSC - Free Report) and SailPoint Technologies . All three stocks carry a Zacks Rank #2 (Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected earnings per share (three to five years) growth rate for H&R Block, SPS Commerce and SailPoint is 10%, 15% and 15% respectively.
5 Stocks to Soar Past the Pandemic:In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
See the 5 high-tech stocks now>>