Invesco (IVZ)

Asset management firm Invesco (NYSE:IVZ) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 48.5% year on year to $1.64 billion. Its non-GAAP profit of $0.61 per share was 39% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1935 when it pioneered the first mutual fund with an objective of capital growth, Invesco (NYSE:IVZ) is a global asset management firm that offers investment solutions across equities, fixed income, alternatives, and multi-asset strategies.

Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.

Invesco competes with other major asset managers including BlackRock (NYSE:BLK), Vanguard Group, State Street Global Advisors (NYSE:STT), T. Rowe Price (NASDAQ:TROW), and Franklin Templeton (NYSE:BEN) in the increasingly competitive investment management industry.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Invesco’s revenue grew at a sluggish 2% compounded annual growth rate over the last five years. This fell short of our benchmarks and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Invesco’s annualized revenue growth of 7% over the last two years is above its five-year trend, but we were still disappointed by the results. Note: 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.

This quarter, Invesco reported magnificent year-on-year revenue growth of 48.5%, and its $1.64 billion of revenue beat Wall Street’s estimates by 38.8%.

Assets Under Management (AUM) encompasses all client funds under a firm's investment management umbrella. The recurring fee structure on these assets provides consistent revenue generation, offering financial stability even during periods of poor investment returns, though sustained underperformance can impact future asset flows.

Invesco’s AUM has grown at an annual rate of 7.6% over the last four years, slightly better than the broader financials industry. When analyzing Invesco’s AUM over the last two years, we can see that growth accelerated to 14.8% annually. Fundraising or short-term investment performance were net contributors for the company over this shorter period since assets grew faster than total revenue. But again, we put less weight on asset growth given how lumpy and cyclical it can be.

In Q3, Invesco’s AUM was $2.1 trillion, beating analysts’ expectations by 16.3%. This print was 17% higher than the same quarter last year.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Custody Bank companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last four years, Invesco’s pre-tax profit margin has risen by 17.6 percentage points, going from 43.2% to 25.6%. Expenses have stabilized more recently as the company’s pre-tax profit margin was flat on a two-year basis.

Invesco’s pre-tax profit margin came in at 21.1% this quarter. This result was 8 percentage points better than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Invesco’s flat EPS over the last five years was below its 2% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded due to factors such as interest expenses and taxes.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Invesco, its two-year annual EPS growth of 16.2% was higher than its five-year trend. This acceleration made it one of the faster-growing financials companies in recent history.

In Q3, Invesco reported adjusted EPS of $0.61, up from $0.44 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Invesco’s full-year EPS of $1.93 to grow 22%.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Invesco has averaged an ROE of 5.6%, uninspiring for a company operating in a sector where the average shakes out around 10%.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Invesco currently has $1.62 billion of debt and $14.01 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.1×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.

It was good to see Invesco beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 4.8% to $24.60 immediately after reporting.

Updated: December 4, 2025 at 11:33 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Invesco, you should also grasp the company’s longer-term business quality and valuation.

Invesco doesn’t pass our quality test. To begin with, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its AUM growth was good over the last five years, the downside is its management fee growth was weak over the last five years. On top of that, its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders.

Invesco’s P/E ratio based on the next 12 months is 10.3x. This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $26.50 on the company (compared to the current share price of $25.30).