3 Reasons Investors Watch BGC (BGC)

BGC Cover Image

BGC currently trades at $9.14 per share and has shown little upside over the past six months, posting a middling return of 0.9%. The stock also fell short of the S&P 500โ€™s 23.8% gain during that period.

Does this present a buying opportunity for BGC? Or is its underperformance reflective of its story and business quality? Find out in our full research report, itโ€™s free for active Edge members.

Why Do Investors Watch BGC Stock?

Tracing its roots back to 1945 and named after founder Bernard Gerald Cantor, BGC Group (NASDAQ: BGC) operates a global brokerage and financial technology platform that facilitates trading across fixed income, foreign exchange, equities, energy, and commodities markets.

Three Things to Like:

1. Skyrocketing Revenue Shows Strong Momentum

Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. BGCโ€™s annualized revenue growth of 16.8% over the last two years is above its five-year trend, suggesting its demand recently accelerated. BGC Year-On-Year Revenue GrowthNote: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

2. EPS Increasing Steadily

We track the long-term change in earnings per share (EPS) because it highlights whether a companyโ€™s growth is profitable.

BGCโ€™s EPS grew at a solid 13.1% compounded annual growth rate over the last five years, higher than its 5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

BGC Trailing 12-Month EPS (Non-GAAP)

3. Previous Growth Initiatives Are Paying Off

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, BGC has averaged an ROE of 10.9%, respectable for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows BGC has a narrow competitive moat.

BGC Return on Equity

Final Judgment

There are definitely things to like about BGC. With its shares underperforming the market lately, the stock trades at 7.1ร— forward P/E (or $9.14 per share). Is now the time to initiate a position? See for yourself in our full research report, itโ€™s free for active Edge members.

Stocks We Like Even More Than BGC

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