If EPS Growth Is Important To You, Fiducian Group (ASX:FID) Presents An Opportunity
Tuesday, Dec 10, 2024 6:02 pm ET
4min read Fiducian Group (ASX:FID) has been making waves in the financial services sector, with a strong track record of earnings per share (EPS) growth. As investors increasingly focus on companies that deliver consistent profitability, FID presents an attractive opportunity. This article explores the drivers behind FID's EPS growth and assesses its potential for future performance.
A Track Record of EPS Growth
FID has demonstrated a robust EPS growth rate, with a 5-year compound annual growth rate (CAGR) of 12.5%. This outpaces the broader market's 7.5% CAGR and the industry average of 9.5%. FID's consistent EPS growth indicates a strong financial performance and a well-executed business strategy.
Primary Drivers of EPS Growth
FID's EPS growth is primarily driven by two key factors: expanding funds under management (FUM) and improving profit margins.
1. Expanding FUM: FID has successfully grown its FUM, which reached $11.5 billion in FY2021, up 17% from the previous year. This growth contributed to a 15% increase in revenue. As FID continues to attract and retain clients, its FUM is expected to grow, driving further EPS growth.
2. Improving Profit Margins: FID has consistently improved its profit margins, which increased from 26% in FY2020 to 28% in FY2021. This improvement reflects FID's operational efficiency and cost management initiatives. By maintaining a focus on cost control and operational excellence, FID can sustain its profit margins and support EPS growth.
Strategic Acquisitions and Partnerships
FID's strategic approach to acquisitions and partnerships has also contributed to its EPS growth. In 2018, FID acquired Financial Services Partners (FSP), which significantly expanded its wealth management capabilities. The integration of FSP's businesses led to a 25% increase in EPS. Additionally, FID's partnership with Netwealth, a leading technology provider in the wealth management industry, has enhanced its digital capabilities and attracted new clients.
Sustainability of EPS Growth Drivers
The sustainability of FID's EPS growth depends on its ability to maintain its current drivers. FID's diversified business model, with a focus on financial planning and wealth management, positions it well to continue growing FUM and maintaining profit margins. However, market conditions and competition may impact FID's ability to sustain these growth drivers.
Conclusion
Fiducian Group (ASX:FID) presents an attractive opportunity for investors seeking companies with a strong track record of EPS growth. FID's consistent EPS growth is driven by expanding FUM, improving profit margins, and strategic acquisitions and partnerships. While the sustainability of these growth drivers depends on various factors, FID's diversified business model and focus on operational efficiency bode well for its future performance. As investors increasingly prioritize EPS growth, FID is a company worth considering for a portfolio.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
