Sunday, April 26, 2020

An AIM Small Cap Fund holding: Envestnet, Inc. (ENV, $53.72): “Envestnet Investment” by: Shant Poladian, AIM student at Marquette University. One of our largest holdings is still a solid hold!

Envestnet, Inc. (ENV, $53.72): “Envestnet Investment”
By: Shant Poladian, AIM Student at Marquette University

Envestnet Announces Advisor Analytics Tools with Five New Features ...

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Envestnet, Inc. (NASDAQ: ENV) is a leading provider of intelligent systems for wealth management and financial wellness. Envestnet’s unified technology systems enhances advisor productivity and strengthens the wealth management process. Envestnet empowers enterprises and advisors to more fully understand their clients and deliver better outcomes.
• For the fourth quarter, adjusted revenue grew by 15%, adjusted EBITDA grew 30% and adjusted earnings per share grew 13% from last year.  
• Envestnet acquired PortfolioCenter. PortfolioCenter is a portfolio management solution to help emerging registered investment advisers (RIAs) streamline their daily operations and enrich their client reporting.
• Envestnet also acquired MoneyGuide. MoneyGuide provides leading goals-based financial planning solutions to the financial services industry.
• Envestnet signed application programming interfaces (API) agreement with Charles Schwab.

Key points: On April 1, 2019, Envestnet acquired the liabilities of the PortfolioCenter business from Performance Technologies, Inc. The PortfolioCenter business provides investment advisors and investment advisory service providers with desktop, hosted and outsourced software solutions. These solutions provide data-management and performance-measurement tools, as well as customizable accounting, reporting, and billing functions delivered through the commercial software application products known as PortfolioCenter Desktop, PortfolioCenter Hosted, PortfolioServices and Service Bureau.

On May 1, 2019, Envestnet acquired all of the outstanding shares of PIEtech, Inc., a Virginia corporation. PIEtech empowers financial advisors to use financial planning to efficiently motivate their clients to create, implement and maintain financial plans that best meet their lifetime financial goals. The technology and operations of PIEtech, which now operates as Envestnet MoneyGuide, has been integrated into our Envestnet Wealth Solutions segment.

MoneyGuide was named the number one financial planning software by the 2020 edition of the Inside Information Survey, as astonishing 12 years in a row. MoneyGuide’s popularity spans firms of all sizes, experience levels, and business models. Recently, Morgan Stanley licensed MoneyGuide’s entire planning offerings for an additional three years.

Lastly, Envestnet recently announced that it has reached a financial data-access agreement with Charles Schwab. Per the agreement, Envestnet will allow Charles Schwab clients to connect to the Envestnet platform and share their financial data with more than 1,200 third-party financial service providers powered by the platform. Furthermore, this platform provides clients visibility and transparency into the linked accounts allowing them to view what type of data is accessed by which third party.

What has the stock done lately? On April 17, 2020, ENV closed at $53.53 per share, and incurred a 7.3% gain the following day, closing at $57.44 per share. Following ENV fourth quarter earnings results, the stock price has remained between $47.07-$78.99. At ENV’s most recent earnings call, the CFO announced 2020’s first quarter outlook of expected growth between 21% and 22% compared to the prior year.

Past Year Performance: Over the past year, ENV reached a 52-week high at $87.75, and a 52-week low at $45.53. Over the past year, ENV is down $16.36, or 23.34%. YTD HCKT is down $17.91, or 24.24%.

Source: FactSet

My Takeaway
Uncertainty in American markets, due to the COVID-19 pandemic, is unpredictable, but I believe in times of crisis we need additional guidance in financial management services. I am optimistic that ENV will continue to recognize revenue growth in the U.S., as demand increases for financial management tools, such as MoneyGuide and PortfolioCenter. Moreover, growing relationships with Charles Scwab and Morgan Stanley will enable ENV to position itself ahead of competitors. With these reasons, I believe ENV represents a hold.

Source: FactSet