Although Perella Weinberg (currently trading at $20.75 per share) has gained 6.5% over the last six months, it has trailed the S&P 500’s 18.4% return during that period. This might have investors contemplating their next move.
Is now the time to buy Perella Weinberg, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is Perella Weinberg Not Exciting?
We're cautious about Perella Weinberg. Here are two reasons why PWP doesn't excite us and a stock we'd rather own.
1. EPS Growth Has Stalled
Analyzing the 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.
Perella Weinberg’s full-year EPS was flat over the last three years, worse than the broader financials sector.
2. Previous Growth Initiatives Have Lost Money
Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.
Over the last five years, Perella Weinberg has averaged an ROE of negative 11.4%, a bad result not only in absolute terms but also relative to the majority of firms putting up 25%+. It also shows that Perella Weinberg has little to no competitive moat.
Final Judgment
Perella Weinberg isn’t a terrible business, but it isn’t one of our picks. With its shares underperforming the market lately, the stock trades at 15.2× forward P/E (or $20.75 per share). Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment. We’d suggest looking at one of Charlie Munger’s all-time favorite businesses.
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