3 Reasons Investors Watch BGC (BGC)

BGC currently trades at $9.14 per share and has shown little upside over the past six months, posting a middling return of 0.9%. The stock also fell short of the S&P 500’s 23.8% gain during that period.

Does this present a buying opportunity for BGC? Or is its underperformance reflective of its story and business quality? Find out in our full research report, it’s free for active Edge members.

Why Do Investors Watch BGC Stock?

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.

Three Things to Like:

1. Skyrocketing Revenue Shows Strong Momentum

Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. BGC’s annualized revenue growth of 16.8% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

2. EPS Increasing Steadily

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 a solid 13.1% compounded annual growth rate over the last five years, higher than its 5% 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, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, BGC has averaged an ROE of 10.9%, 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

There are definitely things to like about BGC. With its shares underperforming the market lately, the stock trades at 7.1× forward P/E (or $9.14 per share). Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.

Stocks We Like Even More Than BGC

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