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Envestnet, Inc. ENV has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of quality and sustainability of its growth. Envestnet’s earnings are anticipated to register 6.4% growth in 2021.
The company’s shares have gained 14.3% over the past year, significantly outperforming 5% rally of the industry it belongs to.
What’s Supporting the Rally?
Investment advice is becoming an important part of financial planning and customers are increasingly seeking personalized wealth management services. Technology adoption is likely to increase significantly with increasing need to interact with clients who prefer guided advice in a cost-effective manner. These trends are creating significant market opportunities for Envestnet’s technology-enabled services.
Envestnet continues to benefit from its solid recurring revenue generation capacity. In the third quarter of 2020 asset-based recurring revenues of $137.7 million increased 8.8% year over year and subscription-based recurring revenues of $107.89 million were up 7.3%.
Envestnet continues to focus on technology development with a view to improve operational efficiency, increase market competitiveness, address regulatory demands and cater to client-driven requests for new capabilities. The company’s technology design allows for significant scalability.
Envestnet's total debt to total capital ratio of 0.44 at the end of the third quarter of 2020 was higher than the industry’s 0.40. A higher debt as a percentage of total capital indicates a higher risk of insolvency.
Further, cash and cash equivalent balance of $363 million at the end of the third quarter was well below the debt level of $750 million, 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).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Some better-ranked stocks in the broader Zacks Business Services sector are ManpowerGroup MAN, FactSet Research FDS and Cross Country Healthcare CCRN, each carrying a Zacks #2 Rank (Buy).
The long-term expected earnings per share (three to five years) growth rate for ManpowerGroup, FactSet and Cross Country Healthcare is 3.5%, 8.5% and 12%, respectively.
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Envestnet, Inc (ENV) : Free Stock Analysis Report
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