Invesco Ltd Valuation – July 2016 $IVZ

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today - July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Invesco Ltd (IVZ) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Invesco Ltd. (Invesco) is an independent global investment management company. The Company provides a range of investment capabilities and outcomes, which are delivered through a diverse set of investment vehicles, to help clients achieve their investment objectives. It operates in the investment management segment. The Company has a presence in the retail and institutional markets within the investment management industry in North America, the United Kingdom, Europe, the Middle East and Asia-Pacific, serving clients in approximately 100 countries. Its Invesco Jemstep solution provides wealth management home offices and their advisors with a suite of technology solutions that are customizable and are integrated into existing systems. Approximately 47.8% of its assets under management (AUM) are invested in equity securities and over 52.2% are invested in fixed income and other investments.


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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of IVZ – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,014,816,894 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.50 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 84.76% Pass
6. Moderate PEmg Ratio PEmg < 20 13.24 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.47 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.50 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.19 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

IVZ value chart July 2016

EPSmg $2.15
MG Growth Estimate 9.81%
MG Value $60.45
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $31.17
MG Value based on 0% Growth $18.27
Market Implied Growth Rate 2.37%
Current Price $28.45
% of Intrinsic Value 47.06%

Invesco Ltd. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.3 in 2012 to an estimated $2.15 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.37% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Invesco Ltd. fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

IVZ charts July 2016

Net Current Asset Value (NCAV) -$25.68
Graham Number $30.20
PEmg 13.24
Current Ratio 0.50
PB Ratio 1.47
Current Dividend $1.08
Dividend Yield 3.80%
Number of Consecutive Years of Dividend Growth 7


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Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $4,280,000,000
Total Current Liabilities $8,598,100,000
Long-Term Debt $5,134,400,000
Total Assets $22,658,200,000
Intangible Assets $7,653,600,000
Total Liabilities $14,754,200,000
Shares Outstanding (Diluted Average) 407,900,000

Earnings Per Share History

Next Fiscal Year Estimate $2.14
Dec2015 $2.26
Dec2014 $2.27
Dec2013 $2.10
Dec2012 $1.49
Dec2011 $1.57
Dec2010 $1.01
Dec2009 $0.76
Dec2008 $1.21
Dec2007 $1.64
Dec2006 $0.60
Dec2005 $0.26
Dec2004 -$0.42
Dec2003 -$0.04
Dec2002 $0.03
Dec2001 $0.28
Dec2000 $0.24
Dec1999 $0.18
Dec1998 $0.10
Dec1997 $0.34

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.15
Dec2015 $2.08
Dec2014 $1.89
Dec2013 $1.60
Dec2012 $1.30
Dec2011 $1.22
Dec2010 $1.04
Dec2009 $1.00
Dec2008 $0.97
Dec2007 $0.70
Dec2006 $0.18
Dec2005 -$0.01
Dec2004 -$0.09
Dec2003 $0.10
Dec2002 $0.16
Dec2001 $0.23
Dec2000 $0.19

Recommended Reading:

Other ModernGraham posts about the company

10 Most Undervalued Companies for the Defensive Investor – July 2016
5 Companies for Value Investors with a High Beta – July 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2016
10 Companies Benjamin Graham Would Invest In Today – June 2016
10 Companies Benjamin Graham Would Invest In Today – May 2016

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The author held a long position in Invesco Ltd (IVZ) but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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