Has Invesco (IVZ) Run Ahead Of Its Value After An 82% One Year Share Price Jump?

• Investors may be wondering if Invesco's current share price aligns with its underlying value, or if the stock has moved ahead of the fundamentals.
• The stock closed at US$27.12, with the share price down 1.7% over the past week, up 9.8% over the last month and showing returns of 0.7% year to date, 81.8% over 1 year, 104.0% over 3 years and 24.6% over 5 years.
• These recent moves have kept Invesco on the radar for investors watching how asset managers are priced in the market. With that in mind, this article steps back from short term headlines and focuses on how different valuation methods compare with the current share price.
• Simply Wall St's valuation framework gives Invesco a valuation score of 4 out of 6, which raises useful questions about where the market might be too cautious or too optimistic, and sets up a closer look at several valuation approaches before finishing with a broader way to think about what the stock could be worth.

Invesco delivered 81.8% returns over the last year. See how this stacks up to the rest of the Capital Markets industry.

Approach 1: Invesco Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to generate above the return that shareholders require, based on the equity cost. It then capitalises those future excess profits over the company’s book value to arrive at an estimate of intrinsic value per share.

For Invesco, the model uses a Book Value of $21.98 per share and a Stable EPS of $2.89 per share, based on weighted future Return on Equity estimates from 4 analysts. The implied Cost of Equity is $2.47 per share, which leaves an Excess Return of $0.41 per share. That excess is supported by an Average Return on Equity of 9.48% and a Stable Book Value assumption of $30.44 per share, sourced from weighted future Book Value estimates from 2 analysts.

When these inputs are combined, the Excess Returns model arrives at an intrinsic value of about $39.43 per share. Compared with the recent share price of $27.12, this implies the stock is 31.2% undervalued on this framework.

Result: UNDERVALUED

Our Excess Returns analysis suggests Invesco is undervalued by 31.2%. Track this in your watchlist or portfolio, or discover 50 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Invesco.

Approach 2: Invesco Price vs Sales

For profitable asset managers, the Price to Sales (P/S) ratio is a useful way to see how the market values each dollar of revenue, especially when earnings can be affected by market cycles or accounting items. A higher multiple usually reflects stronger growth expectations or lower perceived risk, while a lower multiple can suggest more cautious expectations or higher risk.

Invesco currently trades on a P/S ratio of 1.82x. That sits below the Capital Markets industry average P/S of 3.47x and also below the peer group average of 7.92x. Simply Wall St’s Fair Ratio for Invesco is 1.63x, which is its estimate of what a reasonable P/S multiple could be, given factors such as earnings growth, industry, profit margins, market cap and risk profile.

The Fair Ratio is designed to be more tailored than a simple peer or industry comparison because it adjusts for company specific characteristics instead of assuming all asset managers deserve the same multiple. Comparing Invesco’s actual P/S of 1.82x with the Fair Ratio of 1.63x suggests the stock is slightly ahead of that model’s estimate, but the gap is small.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Invesco Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives are Simply Wall St's tool that lets you attach a clear story to your numbers by linking your view on Invesco's future revenue, earnings and margins to a forecast and then to a Fair Value that you can compare with the current share price when deciding whether the stock looks appealing or expensive.

On the Community page, which is used by millions of investors, you can pick or adjust a Narrative that matches how you see the company. That Narrative will automatically refresh when new information such as earnings, news or updated analyst estimates is available, so your Fair Value stays aligned with the latest data rather than a static model.

For Invesco, one investor might lean toward a cautious Narrative that lines up with a Fair Value of about US$26.00, while another might prefer a more optimistic Narrative closer to US$33.21. Seeing those different stories side by side can help you decide which assumptions feel more realistic for you before acting on the gap between Fair Value and price.

For Invesco however we will make it really easy for you with previews of two leading Invesco Narratives:

🐂 Invesco Bull Case

Fair Value: US$29.32 per share

Gap to Fair Value: around 7.5% below this narrative fair value based on the recent US$27.12 share price

Analyst Revenue Outlook: revenue is projected to decline by about 6.73% a year

• Analysts see ETF expansion, private markets growth, and digital transformation as key drivers for future earnings and margins.
• Assumptions include profit margins moving from a loss position to around 20.56% in three years, with earnings reaching about US$1.1b by 2029.
• This view relies on Invesco trading on a P/E of 15.07x by 2029 and on cost discipline, product mix shifts, and capital returns supporting shareholder value.

🐻 Invesco Bear Case

Fair Value: US$26.00 per share

Gap to Fair Value: around 4.3% above this narrative fair value based on the recent US$27.12 share price

Analyst Revenue Outlook: revenue is projected to decline by about 10.57% a year

• This more cautious view highlights pressure from low fee, tech driven investing, fee compression, and strong competition in core products.
• It assumes revenue falling faster than in the bullish case but margins improving to about 24.58% in three years, with earnings of roughly US$1.2b by 2029.
• The fair value rests on a P/E of 12.20x in 2029 and places more weight on the risk that flows, pricing, and product relevance could cap the share price.

If you want to see how these different assumptions stack up across other companies with similar characteristics, you can compare Invesco against stocks highlighted in our solid balance sheet and fundamentals stocks screener via the solid balance sheet and fundamentals stocks screener (45 results)

Do you think there's more to the story for Invesco? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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