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Envestnet (ENV) Benefits From Recurring Revenue Strength

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Envestnet, Inc. ENV is currently benefiting from a strong asset-based and subscription-based recurring revenue generation capacity.

The company recently reported second-quarter 2021 adjusted earnings per share of 67 cents that outpaced the Zacks Consensus Estimate by 24.1% and improved 14% year over year. Revenues of $288.7 million surpassed the consensus mark by 2% and climbed 23% year over year.

Envestnet shares have gained 22.8% over the past six months against 7% decline of the industry it belongs to.

Envestnet, Inc Price

Envestnet, Inc Price
Envestnet, Inc Price

Envestnet, Inc price | Envestnet, Inc Quote

How is Envestnet Doing?

Envestnet’s business model ensures solid asset-based and subscription-based recurring revenue generation capacity. The company provides asset-based and subscription-based services on a business-to-business-to-consumer basis to financial services clients. These clients offer solutions based on Envestnet’s platform to their end users. On a business-to-business basis, the company delivers an open platform to customers and third-party developers through an open API framework. Notably, asset-based recurring revenues of $170 million increased 39% and subscription-based recurring revenues of $113 million were up 7% in the second quarter of 2021.

The company’s technology-enabled services are expected to register handsome growth as trends such as increasing demand for personalized wealth management services and cost-effective guided advice are creating significant market opportunities.

Envestnet continues to focus on technology development to improve operational efficiency, increase market competitiveness, address regulatory demands and cater to client-driven requests for new capabilities. The company’s technology design facilitates significant scalability.

Some Risks

Envestnet's total-debt-to-total-capital ratio of 0.48 at the end of the second quarter of 2021 was higher than the industry’s 0.37. A higher debt, as a percentage of total capital, indicates a higher risk of insolvency.

Envestnet's cash and cash equivalent balance of $370 million at the end of the quarter was well below the long-term debt level of $846 million. This underscores that the company doesn’t have enough cash to meet this debt burden.

Zacks Rank and Other Stocks to Consider

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

Some other similarly ranked stocks in the broader Zacks Business Services sector are ManpowerGroup Inc. MAN, Equifax EFX and TransUnion TRU, each carrying a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for ManpowerGroup, Equifax and TransUnion is pegged at 23.1%, 15.2% and 22%, respectively.


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ManpowerGroup Inc. (MAN) : Free Stock Analysis Report

Equifax, Inc. (EFX) : Free Stock Analysis Report

Envestnet, Inc (ENV) : Free Stock Analysis Report

TransUnion (TRU) : Free Stock Analysis Report

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