WisdomTree has been on fire lately. In the past six months alone, the company’s stock price has rocketed 74.1%, reaching $13.35 per share. This performance may have investors wondering how to approach the situation.
Is now still a good time to buy WT? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free for active Edge members.
Why Is WT a Good Business?
Originally founded as a financial media company before pivoting to ETF management in 2006, WisdomTree (NYSE: WT) is a financial services company that creates and manages exchange-traded funds (ETFs) and other investment products for individual and institutional investors.
1. Long-Term Revenue Growth Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
Over the last five years, WisdomTree grew its revenue at a solid 11.4% compounded annual growth rate. Its growth beat the average financials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
WisdomTree’s EPS grew at a spectacular 23.2% compounded annual growth rate over the last five years, higher than its 11.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Market-Beating ROE Showcases Attractive Growth Opportunities
Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.
Over the last five years, WisdomTree has averaged an ROE of 13.3%, healthy for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows WisdomTree has a decent competitive moat.
Final Judgment
These are just a few reasons why WisdomTree is a cream-of-the-crop financials company, and with the recent surge, the stock trades at 16.5× forward P/E (or $13.35 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
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