Perella Weinberg currently trades at $22.05 per share and has shown little upside over the past six months, posting a middling return of 4.9%.
Is now the time to buy Perella Weinberg, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Do We Think Perella Weinberg Will Underperform?
We're cautious about Perella Weinberg. Here are two reasons you should be careful with PWP and a stock we'd rather own.
1. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Perella Weinberg’s full-year EPS dropped 186%, or 30% annually, over the last four years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Perella Weinberg’s low margin of safety could leave its stock price susceptible to large downswings.
2. Previous Growth Initiatives Have Lost Money
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, Perella Weinberg has averaged an ROE of negative 9.9%, a bad result not only in absolute terms but also relative to the majority of firms putting up 25%+. It also shows that Perella Weinberg has little to no competitive moat.
Final Judgment
Perella Weinberg doesn’t pass our quality test. That said, the stock currently trades at 25.7× forward P/E (or $22.05 per share). This valuation tells us a lot of optimism is priced in - we think other companies feature superior fundamentals at the moment. We’d recommend looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.
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