U.S. markets open in 5 hours 56 minutes
  • S&P Futures

    4,515.00
    +3.75 (+0.08%)
     
  • Dow Futures

    35,362.00
    +39.00 (+0.11%)
     
  • Nasdaq Futures

    15,402.50
    +4.00 (+0.03%)
     
  • Russell 2000 Futures

    2,275.10
    +2.30 (+0.10%)
     
  • Crude Oil

    82.33
    -0.63 (-0.76%)
     
  • Gold

    1,776.20
    +5.70 (+0.32%)
     
  • Silver

    23.93
    +0.05 (+0.22%)
     
  • EUR/USD

    1.1625
    -0.0012 (-0.10%)
     
  • 10-Yr Bond

    1.6350
    0.0000 (0.00%)
     
  • Vix

    15.76
    -0.55 (-3.37%)
     
  • GBP/USD

    1.3782
    -0.0012 (-0.09%)
     
  • USD/JPY

    114.4580
    +0.0980 (+0.09%)
     
  • BTC-USD

    64,021.91
    +1,823.70 (+2.93%)
     
  • CMC Crypto 200

    1,482.27
    +18.91 (+1.29%)
     
  • FTSE 100

    7,216.76
    -0.77 (-0.01%)
     
  • Nikkei 225

    29,255.55
    +40.03 (+0.14%)
     

WisdomTree Trades at a Premium due to High Growth

Analyzing WisdomTree: The Fastest-Growing ETF Provider

(Continued from Prior Part)

High growth

WisdomTree (WETF) stock has risen 33% over the past one year. However, it has fallen 18% over the past three months due to the global stock market rout in the third quarter. Asset managers, brokers, and other financial stocks have posted lower assets under management, profitability, and investment performance due to a slump in global equities.

In the first nine months of 2015, the company’s operating performance was the best in the industry, as it expanded its assets base by 48% and total revenues by 66%. The company declared a quarterly dividend of $0.08 per share, which translates into an annualized dividend yield of 1.6%. The company’s yield remained lower when compared with those of its peers:

  • BlackRock (BLK) – 1.5%

  • T. Rowe Price Group (TROW) – 2.8%

  • Bank of New York Mellon (BK) – 2.7%

Together, these companies form 0.57% of the SPDR S&P 500 ETF Trust (SPY).

WisdomTree’s offerings in currency hedging continue to offer strong growth. It saw major outflows from emerging market economies due to macro issues.

Premium valuations

WisdomTree stock is currently trading at 29x on a one-year forward earnings basis. In comparison, its peers are trading at 16.2x. The company has historically traded at a premium to its peers mainly due to fast-growing assets under management, higher operating margins, and innovative offerings.

Its valuations have peaked at 39x over the last few quarters. In 4Q15, the company has witnessed net positive flows of $398 million with assets under management of $59.5 million as of November 11, 2015. It received positive flows in HEDJ and DXJ ETFs. WisdomTree announced on October 31, 2015, that it will enter into the Commodity ETF space through the acquisition of the following GreenHaven Commodity funds:

  • the GreenHaven Continuous Commodity Index Fund (GCC)

  • the GreenHaven Coal Fund (TONS)

In October, the company launched three ETFs: the WisdomTree Europe Local Recovery Fund (EZR), the WisdomTree Strong Dollar Emerging Markets Equity Fund (EMSD), and the WisdomTree Global ex-US Hedged Real Estate Fund (HDRW).

WisdomTree is experiencing slowing growth in assets under management largely due to macro factors. However, on relative terms, the company has been growing at a faster pace.

Browse this series on Market Realist: