WisdomTree (WT)

Asset management firm WisdomTree (NYSE:WT) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 14.7% year on year to $125.6 million. Its non-GAAP profit of $0.23 per share was 10.4% above analysts’ consensus estimates.

Company Overview

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.

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.

WisdomTree competes with large ETF providers like BlackRock's iShares (NYSE: BLK), Vanguard, State Street Global Advisors (NYSE: STT), and Invesco (NYSE: IVZ), as well as other asset managers offering alternative or specialized investment products.

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, WisdomTree grew its revenue at a solid 12.5% compounded annual growth rate. Its growth surpassed the average financials company and shows its offerings resonate with customers, a great starting point 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. WisdomTree’s annualized revenue growth of 17.4% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. 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, WisdomTree reported year-on-year revenue growth of 14.7%, and its $125.6 million of revenue exceeded Wall Street’s estimates by 2.2%.

Assets Under Management (AUM) is the cornerstone of a financial firm's investment division, representing all client capital under its stewardship. Management fees on this AUM create reliable, recurring revenue that maintains stability even when investment performance struggles, though prolonged poor returns can eventually affect asset retention and growth.

WisdomTree’s AUM has grown at an annual rate of 16% over the last five years, better than the broader financials industry and faster than its total revenue. When analyzing WisdomTree’s AUM over the last two years, we can paint a similar picture as it recorded 16.5% annual growth. This performance aligned with its total revenue.

In Q3, WisdomTree’s AUM was $137.2 billion, beating analysts’ expectations by 1.6%. This print was 21.9% 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.

This is because for financials businesses, interest income and expense should be factored into the definition of profit but taxes - which are largely out of a company's control - should not.

Over the last four years, WisdomTree’s pre-tax profit margin has fallen by 17.2 percentage points, going from 10.4% to 27.6%. It has also expanded by 1.7 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

In Q3, WisdomTree’s pre-tax profit margin was 23.5%. This result was 20 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

WisdomTree’s EPS grew at a spectacular 24.2% compounded annual growth rate over the last five years, higher than its 12.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For WisdomTree, its two-year annual EPS growth of 57.1% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, WisdomTree reported adjusted EPS of $0.23, up from $0.18 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 WisdomTree’s full-year EPS of $0.74 to grow 15.3%.

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 14%, 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.

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.

WisdomTree currently has $819.9 million of debt and $373.4 million of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 1.4×. 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 WisdomTree beat analysts’ EPS expectations this quarter. We were also happy its AUM outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 3.7% to $12.01 immediately following the results.

Updated: December 4, 2025 at 11:14 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

WisdomTree is one of the best financials companies out there. To begin with, its revenue growth was solid over the last five years, and its growth over the next 12 months is expected to accelerate. And while its falling yields show its credit portfolio is delivering lower returns than before, its expanding pre-tax profit margin shows the business has become more efficient. On top of that, WisdomTree’s spectacular EPS growth over the last five years shows its profits are trickling down to shareholders.

WisdomTree’s P/E ratio based on the next 12 months is 12.3x. Looking at the financials space today, WisdomTree’s qualities as one of the best businesses really stand out, and we like it at this price.

Wall Street analysts have a consensus one-year price target of $14.79 on the company (compared to the current share price of $11.29), implying they see 31.1% upside in buying WisdomTree in the short term.