Is it a good company at a reasonable price? The stock price seems reasonable. I do dislike this stock because it is so complex. I personally would not buy it although I know a few people who do recommend it. The stock has produced good returns for shareholders.
I do not own this stock of Brookfield Asset Management Inc (TSX-BAM.A, NYSE-BAM). I bought this stock as Hees International in 1987 and more in 1988, 1989 and 1990. At first dividends were semi-annual and there were 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 what I have always disliked about this company and that is the complexity involved. I would not personally invest in this company because of that.
If you had invested in this company in December 2011, for $1,009.44 you would have bought 81 shares at $12.46per share. In December 2021, after 10 years you would have received $500.56 in dividends. The stock would be worth $6187.59. Your total return would have been $6,688.15.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $12.46 | $1,009.44 | 81 | 10 | $500.56 | $6,187.59 | $6,688.15 |
The dividend yields are low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.48%. The 5 and 10 year median dividend yields are also low at 1.42% and 4.45%. The historical median dividend yield is moderate (2% to 4% ranges) at 2.07%. The dividend growth over the past 5 years is moderate (8% to 14% ranges) at 8.45% per year. The last dividend increase was low (below 8%) at 7.7%.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 22% with 5 year coverage at 31%. The company is putting out Distributable Earnings (or Cash) and the DPR for 2021 is 13% with 5 year coverage at 21%. The company is also putting out Funds from Operations (FFO) data and the DPR for 2021 is 11% with 5 year coverage at 14%. The DPR for Cash Flow per Share (CFPS) for 2021 is 7% with 5 year coverage at 8%. DPR for Free Cash Flow for 2021 ranges from 119% to 150% with 5 year coverage from 28% to 37%. (There is disagreement on FCF.)
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2021 is 1.86. This means that the debt is higher than the stocks Market Cap. The Mortgage/Cash & Investment Ratio is 0.94. I calculate a Liquidity Ratio of 1.19. The Debt Ratio is 1.53. The Leverage and Debt/Equity Ratio for 2021 are 2.90 and 1.90 and are fine.
The Total Return per year is shown below for years of 5 to 33 to the end of 2021 in CDN$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 7.21% | 22.26% | 20.93% | 1.33% |
| 2011 | 10 | 10.82% | 22.63% | 19.88% | 2.75% |
| 2006 | 15 | 8.21% | 12.39% | 10.67% | 1.72% |
| 2001 | 20 | 6.03% | 19.42% | 16.21% | 3.21% |
| 1996 | 25 | 6.74% | 17.22% | 14.28% | 2.94% |
| 1991 | 30 | 5.59% | 16.08% | 12.99% | 3.09% |
| 1987 | 34 | 5.96% | 12.84% | 10.54% | 2.30% |
The Total Return per year is shown below for years of 5 to 33 to the end of 2021 in US$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 8.45% | 23.72% | 22.37% | 1.35% |
| 2011 | 10 | 8.45% | 19.91% | 17.33% | 2.58% |
| 2006 | 15 | 7.60% | 11.89% | 11.89% | 1.80% |
| 2001 | 20 | 7.24% | 21.63% | 21.63% | 4.04% |
| 1996 | 25 | 7.05% | 17.66% | 17.66% | 3.04% |
| 1991 | 30 | 5.26% | 15.46% | 15.46% | 2.81% |
| 1987 | 34 | 6.04% | 13.02% | 13.02% | 2.39% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 14.21, 18.65 and 23.09. The corresponding 10 year ratios are 13.41, 15.24 and 16.98. The corresponding historical ratios are 11.47, 13.67 and 15.44. The current P/E Ratio is 12.33 based on a stock price of $52.64 and EPS estimate for 2022 of $4.27 ($3.08 US$). This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
The company provides Funds from Operations (FFO) data. The 5-year low, median, and high median P/FFO Ratios are 8.43, 10.33 and 13.04. The corresponding 10 year ratios are 8.62, 10.46 and 13.48. The current P/FFO Ratio is 13.21 based on FFO estimate for 2022 of $2.87 and a stock price of $37.90. This ratio is between the median and high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$.
I get a Graham Price of $59.57. The 10-year low, median, and high median Price/Graham Price Ratios are 0.85, 1.02 and 1.14. The current P/GP Ratio is 0.88 based on a stock price of $52.64. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 1.43. The current P/B Ratio is 1.42 based a stock price of $37.90, Book Value of $41,652M and a Book Value per Share of $26.67. The current ratio is below the 10 year median ratio by 0.9%. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$.
I do have a Book Value per Share estimate for 2022. The Book Value per Share estimate for 2022 if $28.40 and this will give a P/B Ratio of 1.33 based on a stock price of $37.90 and Book Value of $44,358M. This ratio is 7% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 9.81. The current P/CF Ratio is 8.61 based on Cash Flow per Share estimate for 2022 of $4.40, stock price of $37.90 and Cash Flow of $6,872M. This ratio is 12% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$.
I get an historical median dividend yield of 2.07%. The current dividend yield is 1.48% based on a stock price of $37.90, and dividends of $0.56. The current dividend yield is 29% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$.
I get a 10 year median dividend yield of 1.48%. The current dividend yield is 1.48% based on a stock price of $37.90, and dividends of $0.56. The current dividend yield is 1.7% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$.
The 10-year median Price/Sales (Revenue) Ratio is 1.04. The current P/S Ratio is 0.70 based on Revenue estimate for 2022 of $84,984M, Revenue per Share of $54.41 and a stock price of $37.90. The current ratio is 33% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.
Results of stock price testing is that the stock price is probably reasonable. The 10 year dividend yield test says this. The P/S Ratio test says that the stock price is cheap. Generally, the dividends reflect what management thinks over the shorter term. Revenue estimates reflects analysts’ attitudes over a longer term. Revenue is what pushes earnings and cash flow on a longer term basis. Most of the other tests, except for the historical dividend yield test says the stock price is reasonable and above or below the median.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (7), Hold (2) and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $73.89 ($53.33 US$). This implies a total return of $41.85% with 40.38% from capital gains and 1.47% from dividends based on a stock price of $52.64 CDN$.
The analysts on Stock Chase like this stock and rate it a Buy. They give this company 5 stars out of 5. It is not on the Money Sense list. Robin Brown on Motley Fool thinks this is a solid stock to pick up now. Jed Lloren on Motley Fool thinks this is a Blue Chip stock to pick up now. The company put out a Press Release on their 2021 results. The company put out a Press Release about its second quarter.
Simply Wall Street on Yahoo Finance talks about ownership of this company. Simply Wall Street puts out three warnings risks of interest payments are not well covered by earnings; large one-off items impacting financial results; and significant insider selling over the past 3 months.
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. Brookfield has the greatest amount of assets in Real Estate and generates the most revenue through 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 Monday, October 21, 2022 around 5 pm.
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