Invesco (IVZ) Stock May Be 44% Undervalued As New ETFs Launch

Invesco has delivered a 135.0% return over the past three years, which naturally puts a spotlight on whether the current share price is supported by the returns the business earns on its capital. With the stock at US$28.47 at the last close and investors digesting new product launches, the question is how much of those capital returns are already reflected in the valuation.

• A roughly 135.0% gain over three years raises the stakes for anyone asking if Invesco's current valuation is still aligned with the returns it is generating on the money it invests back into the business.
• The launch of four new systematic active ETFs managed by Invesco Quantitative Strategies may support expectations for fee income and capital efficiency if the products scale, which matters for how much value the market assigns to each dollar the firm reinvests.
• What if you looked at Invesco through its sales instead? See why Invesco's 1.8x P/S tells a different valuation story.

The issue now is whether the returns Invesco earns on its capital are strong and durable enough to justify where the stock trades today.

If you want to see how other companies stack up on quality and valuation as a reference point for what Invesco is delivering on its capital, scan our 32 high quality undervalued stocks.

Does Invesco Look Undervalued on Excess Returns?

The Excess Returns model looks at how much profit Invesco can generate on each dollar of shareholder equity above its cost of capital. On this view, the business is modeled to earn stable EPS of $3.38 per share against a cost of equity of $2.56 per share, leaving an excess return of $0.82 per share.

That spread sits on top of a current book value of $23.02 per share and a stable book value estimate of $31.75 per share, with an average return on equity of 10.64%. Because the four new systematic active ETFs are capital light products, the launch helps explain why the Excess Returns projections put intrinsic value substantially above the current US$28.47 share price. Find out what Invesco could be worth using our Excess Returns estimate.

The Invesco Narrative: What Would Justify Today's Price?

Simply Wall St's Narratives for Invesco pick up where the valuation puzzle leaves off by spelling out which paths for growth, margins and earnings would need to play out for the stock to be worth materially more or less than today's price, and they sit on the Community page. Each Narrative treats Invesco's fair value as a specific, trackable thesis about the business that you can watch either hold up or break down over time.

One of the top narratives on Invesco: 19% undervalued

This Narrative is the analyst consensus Narrative on Simply Wall St, which compiles analysts' consensus price target and revenue and earnings forecasts, not one person's view.

"Ongoing development of the hybrid investment platform and the partnership with Anthropic to embed portfolio intelligence and model portfolios into advisor workflows is expected to improve distribution reach and operating efficiency…"

Discover why this Narrative puts Invesco at 19% undervalued.

One more Invesco check that belongs next to the price chart

There is one piece of the Invesco story that the EPS, book value and product launches do not touch, which is the recent insider share activity flagged by our checks, and the specific sellers, sizes and possible read-throughs are for you to unpack. See the recent insider selling flagged for Invesco.

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