WisdomTree currently trades at $22.75 and has been a dream stock for shareholders. It’s returned 272% since August 2021, blowing past the S&P 500’s 73.1% gain. The company has also beaten the index over the past six months as its stock price is up 38.9% thanks to its solid quarterly results.
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 WisdomTree 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
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
Thankfully, WisdomTree’s 17.1% annualized revenue growth over the last five years was impressive. 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 28.8% compounded annual growth rate over the last five years, higher than its 17.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity, or ROE, quantifies financial firm 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, WisdomTree has averaged an ROE of 16.3%, impressive 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 strong competitive moat.
Final Judgment
These are just a few reasons why we think WisdomTree is one of the best financials companies out there, and with its shares beating the market recently, the stock trades at 18.8× forward P/E (or $22.75 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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