Over the past six months, BGC has been a great trade, beating the S&P 500 by 7.1%. Its stock price has climbed to $10.64, representing a healthy 18.7% increase. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Following the strength, is BGC a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Is BGC a Good Business?
Tracing its roots back to 1945 and named after founder Bernard Gerald Cantor, BGC Group (NASDAQ:BGC) operates a global brokerage and financial technology platform that facilitates trading across fixed income, foreign exchange, equities, energy, and commodities markets.
1. Long-Term Revenue Growth Shows Momentum
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
Thankfully, BGC’s 10.3% annualized revenue growth over the last five years was decent. Its growth was slightly above 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.
BGC’s EPS grew at 18.6% compounded annual growth rate over the last five years, higher than its 10.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Previous Growth Initiatives Are Paying Off
Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of financial firm funding. Financial firms maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.
Over the last five years, BGC has averaged an ROE of 12.3%, respectable for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows BGC has a narrow competitive moat.
Final Judgment
These are just a few reasons why we’re bullish on BGC, and with its shares outperforming the market lately, the stock trades at 7.6× forward P/E (or $10.64 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More Than BGC
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