Envestnet, Inc.
ENV
has an impressive
Growth Score
of B. 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 9.2% growth in 2022. The company’s shares have gained 28.8% in the past year.
Aiding Reasons
Envestnet continues to benefit from its solid recurring revenue generation capacity. In fourth-quarter 2020, asset-based recurring revenues of $146.1 million increased 14% year over year and subscription-based recurring revenues of $109.1 million were up 6%.
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 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.
Risks Associated
Envestnet’s total debt to total capital ratio of 0.44 at the end of the fourth quarter of 2020 was higher than the industry’s 0.38. A higher debt, as a percentage of total, capital indicates a higher risk of insolvency.
Further, cash and cash equivalent balance of $385 million at the end of the fourth quarter was well below the debt level of $757 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).
Some better-ranked stocks in the broader Zacks
Business Services
sector are
S&P Global Inc.
SPGI
, Gartner, Inc.
IT
and
TeleTech Holdings
TTEC
. S&P Global and Gartner carry a Zacks Rank #2 (Buy), while TeleTech sports a Zacks #1 Rank (Strong Buy). 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 S&P Global, Gartner and TeleTech is pegged at 10%, 13.5% and 14.7%, respectively.
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