I do not own this stock of Brookfield Asset Management Inc (TSX-BAM.A, NYSE-BAM). I used to own an earlier version of this stock as Hees International, then Edper Group and then EdperBrascan back in 1987 to 1999. I bought this stock as Hees International in 1987 and more in 1988, 1989 and 1990. At first dividends were semi-annual and there was some good dividend increases. There was a much lower dividend increase in 1991. Between 1991 and when I sold 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.
When I was updating my spreadsheet, I noticed that the estimates I got last year showed that Revenue and Earnings would be lower in 2018, but they went higher. The 12 month Revenue and Earnings I got by using the second quarterly results of 2018 showed increasing Revenue and Earnings. For 2017, the 12 month Revenue was $40,786M and Earnings was $1.34. Estimates for 2018 for Revenue was $34,197M and Earnings was $1.50. Revenue came in at $56,771M and earnings at $3.40. The 12 month Revenue was $51,248 and Earnings was $2.65. So, the estimates were way off, but the 12 month values to the end of the second quarter showed the right way.
I have tracked dividends on this stock for some 31 years. They started off good (5% and above), then went to moderate (2 to 5% ranges) and now are low (under 2%). The current dividend is 1.15%, with 5, 10 and historical median dividend yields at 1.46%, 1.61% and 2.01%. These yields are in US$.
Dividend growth has been low (under 8%) to Moderate (8% to 14% ranges) over the years. It has been moderate over the past 5 years at 8.8% per year. The last increase was lower at 6.7% and it was for 2019. You can see from the following charts that increases are higher but yields are lower. The company has been reporting in US$ since 2002, so it is only in the earliest 5 years that the reporting was in CDN$ for these charts.
The Dividend Payout Ratios are good. As the yields have come down and the increases have gone up, the DPR has gone down. The DPR for EPS for 2018 is 18% with 5 year coverage at 22%. The DPR for CFPS for 2018 is 9% with 5 year coverage at 11%.
Debt Ratios are all fine. The Long Term Debt/Market Cap Ratio for 2018 is good at 0.17. The Liquidity Ratio at 1.61 for 2018 is good. The Debt Ratio at 1.61 is good. Leverage and Debt/Equity Ratios at 2.64 and 1.64 are fine.
The Total Return per year is shown below for years of 5 to 31 to the end of 2018 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 14.37% | 15.65% | 13.74% | 1.91% |
| 2008 | 10 | 7.00% | 18.19% | 15.36% | 2.83% |
| 2003 | 15 | 10.37% | 16.53% | 13.48% | 3.05% |
| 1998 | 20 | 5.32% | 16.97% | 13.43% | 3.54% |
| 1993 | 25 | 4.23% | 16.39% | 12.02% | 4.36% |
| 1988 | 30 | 4.13% | 11.15% | 8.19% | 2.97% |
| 1987 | 31 | 4.53% | 12.39% | 8.83% | 3.56% |
The Total Return per year is shown below for years of 5 to 31 to the end of 2018 in US$.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 8.81% | 9.89% | 8.18% | 1.71% |
| 2008 | 10 | 5.84% | 19.13% | 15.60% | 3.53% |
| 2003 | 15 | 9.97% | 16.65% | 13.10% | 3.55% |
| 1998 | 20 | 5.97% | 18.20% | 14.08% | 4.12% |
| 1993 | 25 | 4.11% | 16.28% | 11.89% | 4.39% |
| 1988 | 30 | 3.67% | 10.65% | 7.70% | 2.95% |
| 1987 | 31 | 4.37% | 12.44% | 8.66% | 3.78% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.61, 14.02 and 15.44. The corresponding 10 year ratios are 11.70, 12.90 and 14.86. The historical ratios are 11.14, 13.24 and 15.18. The current P/E Ratio is 27.63 based on a stock price of $72.27 and 2019 EPS estimate of $2.63 ($2.03 U$). This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a Graham Price of $76.80. The 10 year low, median, and high median Price/Graham Price Ratios are 0.77, 0.86 and 1.01. The current P/GP Ratio is 0.95 based on a stock price of $73.27. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 1.32. The current P/B Ratio is 0.74 based on a Book Value of $72,324M, Book Value per Share of $75.66 and a stock price of $55.67. The current ratio is 44% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You get similar results in CDN$.
I get an historical median dividend yield of 2.01%. The current dividend is 1.15% based on dividends of $0.64 and a stock price of $55.67. The current yield is 42% below the historical ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You get similar results in CDN$.
However, since the long term trend is a lower yield, it is interesting to look at the 10 year median yield which is 1.61%. The current yield at 1.15% is still much lower at 29% lower. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You get similar results in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 1.13. The current P/S Ratio is 0.88 based on 2019 Revenue estimate of $60.237M, Revenue per Share of $63.02 and a stock price of $55.67. The current P/S Ratio is some 22% below the 10 year median. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You get similar results in CDN$.
Results of stock price testing is that the stock price is probably cheap to reasonable. The best test is the P/S Ratio test and it is showing here as cheap (but just over the line to cheap). The P/B Ratios testing is showing this stock as cheap. A good test generally is the dividend yield test. This is showing the stock price as expensive, but there is a downward trend to a lower yield. However, a negative is that the latest increase, which is for 2019, is lower at 6.67% than the 5 year increase per year at 8.81%.
Is it a good company at a reasonable price? A lot of people like this company and their spin offs. I must say that their set up seems quite complex and I find this a negative. However, they have delivered a fair return to their shareholders over time. The analysts’ recommendation of Strong Buy certainly conflicts with a stock price loss over the next year.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6) and Hold (1). The consensus would be a Strong Buy. The 12 months stock price is $59.96 ($45.90 US$). This implies a total loss of 17.02% with a capital loss of 18.16% and dividends of 1.14%.
See what analysts are saying on Stock Chase. Some say it is at a record high. Reuben Gregg Brewer on Motley Fool says to buy Brookfield for growth not for its dividend. A writer on Simply Wall Street talks about institutional ownership of this company at 66%. Data on Market Stock Alerts says this stock has a Buy Signal. Kenny Obasanjo on Mitchell Messenger talks about AdvisorNet Financial Inc buying more shares in this company.
Brookfield Asset Management Inc owns and manages commercial property, power, and infrastructure assets. Its investment focus includes Real Estate, Infrastructure, Renewable Power and Private Equity. Located around the world, its assets are concentrated in the United States, Canada, Brazil, and Australia. Its web site is here Brookfield Asset Management Inc.
The last stock I wrote about was about was Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more. The next stock I will write about will be CCL Industries Inc (TSX-CCL.B, OTC-CCDBF) ... learn more on Friday, November 1, 2019 around 5 pm. Tomorrow on my other blog I will write about Money Show 2019 – David Rosenberg.... learn more on Thursday, October 31, 2019 around 5 pm.
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