What a fantastic six months it’s been for WisdomTree. Shares of the company have skyrocketed 62.4%, setting a new 52-week high of $19.25. This was partly thanks to its solid quarterly results, and the 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.
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. Skyrocketing Revenue Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
Luckily, WisdomTree’s revenue grew at an impressive 16.1% compounded annual growth rate over the last five years. Its growth beat the average financials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
WisdomTree’s EPS grew at 30.1% compounded annual growth rate over the last five years, higher than its 16.1% 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 15.2%, 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 one of the best financials companies out there, and with the recent rally, the stock trades at 15.3× forward P/E (or $19.25 per share). Is now the time to buy despite the apparent froth? See for yourself in our full research report, it’s free.
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