Brookfield Asset Management Inc.

Sound bite for Twitter and StockTwits is: Price Expensive. I am doing my testing in CDN$ terms, but you will get the same results in US$ terms. I think that it is currently overpriced. Others do not see this. However, it is showing as expensive on a number of tests, not just the P/E Ratio test. See my spreadsheet on Brookfield Asset Management Inc.

I do not own this stock of Brookfield Asset Management Inc. (TSX-BAM.A, NYSE-BAM) but I used to own a past version of it. I bought this stock as Hees International in 1987 and more in 1988, 1989 and 1990. Between 1991 and when I sold it as Edperbrascan in 1999 there was no dividend increases. The stock was going nowhere at that time, so I sold. There have been a lot of name changes and amalgamations since I had this stock.

The company has been Brookfield Asset Management Inc. since 2005, but over the years it has changed a lot and not only in name. There is a Wikipedia entry for this company. I have tracked the dividends from 1987 and they have gone up and down and remained flat at various times. I would suggest that dividend will likely behave in the same manner in the future. This company switched to from CDN$ to US$ in 2001.

Dividends are currently low, but they have been moderate in the past. Dividend growth has been moderate lately. The current dividend is 1.5% based on a stock price of $46.03 CDN$ and dividends of $0.52 US$ ($0.70 CDN$ currently). Dividend is also 1.5% in US$ with stock price of $34.31 US$.

The growth in dividends in US$ is 6.4% and 10.5% per year over the past 5 and 10 years. In CDN$ it is better as our currency has been falling against the US$. Growth in CDN$ is 12.4% and 13.7% per year over the past 5 and 10 years. Note that the problem for Canadians holding this stock is that dividends will fluctuate.

Dividends used to be higher and that is why the 5 year median Dividend Yield in CDN$ terms is 1.62% and the historical median Dividend Yield in CDN$ terms is 2.69%. The 5 year median Dividend Yield in US$ terms is 1.57% and the historical median Dividend Yield in US$ terms is 2.88%. This stock is considered to be a dividend growth stock.

There has been good growth in Revenue and moderate to good growth in Cash Flow. Earnings have not been as good as they have been low to moderate. For example, the 5 and 10 years Revenue growth is 10.5% and 14.3% per year, the Cash Flow growth has been 5.1% and 14.4% per year over the past 5 and 10 years and the EPS has been 7.8% and 2.2% per year over the past 5 and 10 years. All these figures are in US$ terms.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.80, 11.70 and 12.61. The corresponding 10 year values are 12.04, 14.12 and 16.20. The corresponding historical values are 10.80, 12.81 and 14.93. This is rather interesting. The current P/E Ratio is 42.37. This is based on EPS estimate for 2016 of $1.09 CDN$ ($0.81 US$) and a stock price of $46.03. (Forward P/E Ratio is the same in US$ and CDN$). This stock price testing suggests that the stock price is relatively expensive. This test is in CDN$ terms.

This high P/E Ratio is because analysts' expect the EPS to drop some 64% in 2016. If you look at the 12 month period to the end of the second quarter and compare it to the 12 month period to the end of 2015, EPS has dropped some 43%. The drop in expected EPS does not seem unreasonable.

I get a Graham Price of $27.56. The 10 year low, median and high median Price/Graham Price Ratios are 0.81, 0.92 and 1.02. The current P/GP Ratio is 1.67 based on a stock price of $46.03. This stock price testing suggests that the stock price is relatively expensive. This test is in CDN$ terms.

I get a 10 year Price/Book Value per Share Ratio of 1.37. The current P/B Ratio is 1.48 based on BVPS of $31.07 and a stock price of $46.03. The current ratio is some 8.4% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable, but above the median. This test is in CDN$ terms.

The current Dividend Yield is 1.52% based on dividends of $0.70 and a stock price of $46.03. The historical median Dividend Yield is 2.69%. The current Dividend Yield is some 44% above the historical Dividend Yield. This stock price testing suggests that the stock price is relatively expensive. This test is in CDN$ terms.

The 10 year median P/S Ratio is 1.27. The current P/S Ratio is 2.11 based on 2016 Revenue estimate of $2.986M (15.647M US$) and a stock price of $46.03. This stock price testing suggests that the stock price is relatively expensive. This test is in CDN$ terms.

When I look at analysts' recommendations, I find Strong Buy and Buy recommendations. Most of the recommendations are Buy Recommendations. The consensus would be a Buy recommendation. The 12 month stock price is $37.15 US$. This implies a total return of 9.79% with 8.28% from capital gains and 1.52% from dividends based on a stock price of $34.31 US$. (You get similar results in CDN$ terms.)

This article by Michael Collier in Chester Independent talks about a recent buy of BAM shares by Capital Advisors and some recent ratings on this company. Jacob Donnelly of Motley Fools thinks this is a buy and hold forever stock. See what analysts are saying about this stock on Stock Chase .

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see that report here and here.

The last stock I wrote about was about was TransForce Inc. (TSX-TIF, OTC-TFIFF)... learn more . The next stock I will write about will be CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF)... learn more on Friday, November 11, 2016 around 5 pm. Tomorrow on my other blog I will write about Something to Buy November 2016... learn more on Thursday, November 10, 2016 around 5 pm..

This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Its web site is here Brookfield Asset Management Inc..

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.