Brookfield Asset Management down 2.0% in 2 days 02 December 2019

NEWS BITES - NORTH AMERICA

Brookfield Asset Management Inc. (TSX:BAM.A), Canada's largest Real estate services company by market cap, extended its slide on Monday, shedding an additional 46.0c (0.6%) to close at CAD76.39. The shares have dropped CAD1.58 (2.0%) over the past two trading days, compared with the S&P/TSX 60 Index which fell 8.5 points (0.8%) in the two days for a relative price change of -1.2%. There were 1,320,348 shares worth CAD100.9 million (US$75.9 million) traded today. Today the stock traded between its three-day high of CAD77.38 and seven-day low of CAD76.10.

BROOKFIELD ASSET MANAGEMENT DIVIDENDS

The shares dropped 2.0% in the 2 trading sessions since the ex-dividend date of November 28. The company paid a dividend of 21.26c per share. Based on dividends of CAD1.05 per share for the trailing twelve months and the last price of CAD76.39 the dividend yield is 1.4%.

BULLISH TURNING POINT

Dividend Yield increases to 1.38%

Based on dividends of CAD1.05 per share for the trailing twelve months and the last price of CAD76.39 the dividend yield is 1.38%, a significant improvement from 1.09% on the previous day. It is comfortably above Benjamin Graham's benchmark of 2/3rd the triple-A bond yield of 1.47%. The yield of 1.38% is above the benchmark of 0.92% by 46 basis points or 0.46%.

Stock Summary

CurrencyCanadian Dollar (CAD) 1 CAD = 0.75 USD
Today's close (CAD)76.39
52-Week Range (CAD)49.2-78.6
SectorReal Estate Services sector
Shares Outstanding995,701,150
Market CapCAD76.1 billion (US$57.2 billion)

Highlights in today's Report:

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

SECTION 2 TODAY'S BEARISH SIGNALS

SECTION 3 TODAY'S BULLISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF CAD76.39):

SECTION 4 THE PAST WEEK

SECTION 5 ONGOING BULLISH PARAMETERS

SECTION 6 ONGOING BEARISH PARAMETERS

SECTION 7 SUMMARY FINANCIALS

SECTION 8 CORPORATE PROFILE

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

[Volume Index or VI in brackets; 1 is average]

+ Toronto: BAM.A.TSX 1,320,348 volume 70.93% of aggregate. Price: CAD76.39.

+ New York: BAM.NYSE 540,500 [VI of 0.3] volume 29.04% of aggregate. Price: $US58.41. Using the current exchange rate of USD1 equals 1.3281CAD, The shares are at a 1.6% premium to the close price on Toronto.

+ Aggregate volume: there were 1.9 million shares of Brookfield Asset Management worth CAD142.8 million traded today. The aggregate volume was 1.2 times average trading of 1.6 million shares.

SECTION 2 BROOKFIELD ASSET MANAGEMENT BEARISH SIGNALS

2.1 Overvaluation [compared with sector average]:

Price/Earnings

+ Price/Earnings of 22 [18.8]. We estimate Brookfield Asset Management stock is trading at a current year P/E of 13.6 and a forward year P/E of 8.8.

Dividend Yield

+ To quote Benjamin Graham: "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 0.9 times the triple-A bond yield of 1.5%.

+ The relative yield of BAM.A, defined by its yield of 1.4%, divided by average yield of dividend yielding stocks in the S&P/TSX 60 Index of 3.5% is 39.9%. This suggests Brookfield Asset Management stock is overvalued in dividend yield terms.

Price to Sales

+ Price/Sales of 1.3 [0.9].

Price to Book

+ Price to Book of 1.1 [0.3].

2.2 Overvaluation Indicator and rank of Brookfield Asset Management in the Canadian market:

DescriptionValueRank In Market
Dividend Yield %1.4In Bottom 8%

2.3 Downtrend:

+ Rising open interest with falling price

+ Open Interest Trend

Same day trend: The price decreased 0.6% from CAD76.85 to CAD76.39; Open interest has increased 0.6% from 5,623 to 5,658. A fall in price combined with an increase in open interest suggests there is new money coming into the market from short sellers. This is a bearish signal.

DurationOpen Interest change %Price change %Interpretation
1-day0.6-0.6Weak Market

SECTION 3 BROOKFIELD ASSET MANAGEMENT BULLISH SIGNALS

3.1 Undervaluation [compared with sector average]:

Earnings Yield

+ Earnings yield of 4.5% is 3.1 times the 10-year bond yield of 1.47%.

MCap/Total Assets

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.3. Compared with the rest of the market the stock is undervalued and ranks in the top quartile of stock by value of Q Ratio.

3.2 Undervaluation Indicator and rank of Brookfield Asset Management in the Canadian market:

DescriptionValueRank In Market
Price/Earnings/Growth0.1In Top Quartile

3.3 Uptrend:

+ Decreasing Put Call Ratio

+ Put Call Contracts

The Put/Call ratio has declined from 0.362 to 0.36 suggesting an uptrend.

Put ContractsCall ContractsPut/Call ratio
Today1,4994,1590.36
Previous day1,4944,1290.362

Price/Moving Average Price and MACD:

+ The Price/MAP of 1.16 for BAM.A is higher than the Price/MAP for the S&P/TSX 60 Index of 1.1.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 76.3 minus the 26-day EMA of 74.97 is positive suggesting a bullish signal. Both the 12-day EMA as well as the 26-day EMA are rising, another bullish signal.

+ The price to 50-day EMAP ratio is 1.0, a bullish indicator. In the past 50 days this ratio has exceeded 1.0, 26 times suggesting further upside. The 50-day EMAP has increased to CAD73.11. An increase is another bullish indicator.

+ The price to 200-day MAP ratio is 1.16, a bullish indicator. In the past 200 days this ratio has exceeded 1.16 14 times suggesting further upside. The stock is trading above both its MAPs and the 50-day MAP of CAD72.41 is higher than the 200-day MAP of CAD65.86, a bullish indicator. The 200-day MAP has increased to CAD65.86. An increase is another bullish indicator.

Past Week:

+ Brookfield Asset Management Inc. is placed 598/1785 in BuySellSignals' ranking of Canadian performers in the past week, a percentile ranking of 66.

Past Month:

+ In the past three months the stock has hit a new 52-week high twenty-one times, pointing to a significant uptrend.

+ The present value of CAD1,000 (PV1000) invested one month ago in Brookfield Asset Management is CAD1,068, comprising a capital gain of CAD65 and dividend reinvested of CAD3.

PV$10001-week1-month1-year
BAM.A.TSX1,0121,0681,318
S&P/TSX 60 Index9961,0041,112

Relative Strength (6 months):

+ In the Canadian market of 1,711 stocks and 69 units traded today, the stock has a 6-month relative strength of 86 which means it is beating 86% of the market.

3.4 High Price Performance Indicators and rank of Brookfield Asset Management in the Canadian market:

DescriptionBAM.A ValueRank In Market
MCapCAD76.1 billionIn Top 1%
Today's Trading TurnoverCAD100.9 million (US$75.9 million)In Top 2%
Price/MAP2001.16In Top Quartile
Price/MAP501.05In Top Quartile

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF CAD76.39):

SECTION 4 THE PAST WEEK

4.1 Snapshot: Brookfield Asset Management stock was up 68.81c or 0.9% in the past week. It outperformed the S&P/TSX 60 index in 4 out of 5 days.

DayBrookfield Asset ManagementClose price [CAD]Price change %Relative change %Comment
FridayLoses CAD1.1 billion (US$839.2 million) in MCap76.85-1.4-1.2Steepest Fall
ThursdayHits year-high 13th time in one month77.970.80.5Price/PMAP200 above 1 and rising
WednesdayHits year-high 12th time in one month77.350.70.3Price/PMAP200 above 1 and rising
TuesdayHits year-high 11th time in one month76.830.60.8VI*=1.1
MondayIncreases strengthening above moving average price76.360.90.4Top Rise

[Volume Index (VI); 1 is average]

4.2 Volatility:

+ Brookfield Asset Management is at a discount of 2.8% to its 12-month high of CAD78.62 on November 28. It is also at a premium of 55.2% to the 12-month low of CAD49.23 on December 24, 2018.

SECTION 5 ONGOING BULLISH PARAMETERS

5.1 Performance:

+ Return on Equity 7.7% [3.4%].

+ Return on Assets 2.9% [1.3%].

+ Return on Capital Employed 7.2% [5.5%].

+ Net profit margin has averaged 12.7% in the last 3 years. This is better than the sector average of 6.8% and suggests a high margin of safety.

+ As per the Du Pont analysis, Return on Equity [ROE] is less than stellar at 7.7%; an improvement from 5.7% last year. ROE is computed as net profit margin of 13.2% times asset turnover [sales/assets] of 0.22 times leverage factor [total assets/shareholders' equity] of 2.6.

5.2 High Growth and Performance Indicator and rank of Brookfield Asset Management in the Canadian market:

DescriptionValueRank In Market
EPS Growth %153.3In Top 5%

5.3 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 18.5%. The Moving Annual Return has consistently exceeded 2%.

BAM.AClose (CAD)Dividends (CAD)Capital Gain %% YieldAnnual Return %
Dec 0276.391.0531.81.833.7
1 Yr ago57.940.7811.71.513.2
2 Yrs ago51.880.7319.61.721.2
3 Yrs ago43.390.690.71.62.4
4 Yrs ago43.070.6120.21.722.0

Close 5 years ago CAD35.81

5.4 Increased VWAP

Past five years, 12 months ended Dec 02 (CAD)

YearHigh PriceVWAPLow Price
201978.6263.1749.23
201858.3652.3545.46
201752.7947.4741.46
201645.7241.6335.6
201545.5940.5533.96

In the past five years Volume Weighted Average Price (VWAP) has increased by 55.8% to CAD63.17. Based on a dynamic start date of five years ago, there has been no decline in VWAP over the last 5 years.

5.5 Increased Average Daily Turnover

Past five years, 12 months ended Dec 02 (CAD million)

YearAverage Daily Turnover
201968.2
201851.0
201745.1
201641.5
201549.5

In the past five years, average daily share turnover has increased 37.6% to CAD68.2 million (US$51.3 million). This suggests increased liquidity.

SECTION 6 ONGOING BEARISH PARAMETERS

6.1 Growth:

Quarterly Trend in Revenue, Net Profit and Net Profit Margin:

+ Net Profit margin is positive but falling in recent quarters. [All figures in %]

Qtr-endedRevenue GrowthNet Profit GrowthNet Profit Margin
Jun 19 [Q2]11.3-35.14.2
Mar 19 [Q1]--8.3

6.2 High Debt Indicators:

+ Total Liabilities/EBITDA of 34.8 compares unfavourably with the Joseph Piotroski benchmark of 5.

6.3 Increase in Insider Selling

In the past 5 years a total of 6,331,267 Brookfield Asset Management shares worth CAD78.2 million were sold by insiders. Based on a dynamic start date of 5 years ago, insider selling has averaged 1,266,253 shares per year. In the past year, insiders sold 1,479,364 shares, an increase of 78.5% from the previous year.

SECTION 7 BROOKFIELD ASSET MANAGEMENT SUMMARY FINANCIALS

7.1 Dividend History

Trailing 12 months dividend for the 12 months ended December 02 has improved from 61.0c in 2015 to CAD1.05 in 2019; there were no declines in the past 5 years. Dividends were up 35.0% for the 12 months ended December 02 from 77.89c in 2018 to CAD1.05 in 2019.

7.2 Financials Summary

Year endedDec 2018Dec 2017Dec 2016
Sales (USD B)42.730.726.5
Pretax (USD B)5.63.43
Net (USD B)2.71.11.7
EPS (CAD)3.471.37-

+ Net profit was up 145.1% from US$1.1 billion in 2017 to US$2.7 billion in 2018.

+ Earnings Per Share (EPS) was up 153.3% from CAD1.37 to CAD3.47.

7.3 Quarterly Report: Key Parameters

Quarterly Report Analysis Q3 2019: Brookfield Asset Management EPS soars 151%


Release Date: November 19, 2019

Brookfield Asset Management (TSX:BAM.A), announced EPS of 93.0c (US70.28c) for the quarter-ended 30 September 2019 [Q3/2019], up 151.4% sequentially from 37.0c (US28.26c) in the previous quarter [Q2/2019].

Quarter-ended30 Sep [Q3/2019]30 Jun [Q2/2019]31 Mar [Q1/2019]
EPS, c93.037.059.0
Sequential growth in EPS %151.35-37.29-
Revenue, CAD billion17.916.915.2
Revenue, $US billion13.512.811.5
Sequential growth in Revenue %5.6211.28-
Net Profit, CAD million947399615
Net Profit, $US million716302465
Sequential growth in Net Profit %137.34-35.12-

Compared with the previous corresponding period [PCP; Q3/2018], year-over-year [y.o.y.] EPS was up 745.5%, Revenue was up 20.3% and Net Profit was up 481%.

Quarter-ended30 Sep [Q3/2019]30 Sep [Q3/2018]
EPS, c93.011.0
PCP growth in EPS %745.45-44.99
Revenue, CAD-14.9billion
Revenue, $US-11.2billion
PCP growth in Revenue %20.31-
Net Profit, CAD million947163
Net Profit, $US million716123
PCP growth in Net Profit %480.98-28.5

Major changes compared with previous corresponding period [Year-on-Year]:

Favourable Changes:

- Net profit up 481% from CAD163.0m ($US126.3m) to CAD947.0m ($US715.6m)

- Profit after tax to Sales up from 1.1% to 5.3%

Currency Conversion (September 30, 2019): $US1 = CAD1.32

Currency Conversion (September 30, 2018): $US1 = CAD1.29

7.4 Annual Report: Key Parameters

FY2018 Annual Report: Brookfield Asset Management Net Profit up 145%


Release Date: March 29, 2019

Brookfield Asset Management (TSX:BAM.A) reported net profit for the year-ended 31 December 2018 of CAD3.6b ($US2.6b), up 145.1% from CAD1.5b ($US1.2b) in the previous year. Earnings per share (EPS) were up 153.3% from CAD1.37 ($US1.09) in FY2017 to CAD3.47 ($US2.55) in FY2018.

Major changes compared with previous year:

Favourable Changes:

- EBIT Margin up from 11.2% to 13.2%

- EBIT to total assets up from 2.4% to 2.9%

- Profit before tax to Sales up from 11.2% to 13.2%

- Net tangible assets per share up 15.7% from CAD61.54 ($US49) to CAD71.18 ($US52.2)

Unfavourable Changes:

- Current ratio down 6.3% from 1.1 to 1.0

- Working capital to total assets down from 6.0% to 2.3%

- Fixed Assets to Total Assets down from 27.5% to 26.3%

- Total Liabilities to EBITDA of 34.8 compares unfavourably with the Joseph Piotroski benchmark of <5. However, it has improved by 28.3% from the previous year's ratio of 48.6.

- Total Liabilities to Operating Cash Flow of 29.6 compares unfavourably with the Joseph Piotroski benchmark of <4. This ratio has deteriorated by 10.6% from the previous year's ratio of 26.8.

Note:

- Total revenue to total assets steady at 0.2

- Cost of Goods Sold to Sales up from 79.4% to 80.2%

- Total liabilities to Total assets steady at 0.6

- Total current assets to Total Assets up from 61.6% to 61.9%

- Short-term investments to Total Assets down from 49.4% to 49.3%

- Total non-current assets to Total Assets down from 38.4% to 38.1%

- Intangibles to Total Assets up from 10.1% to 10.8%

Annual Report [Year-on-year comparison: 2018 vs 2017]

Company Name : Brookfield Asset Management Inc. (BAM.A)
December 312018201720182017Change
DescriptionCAD mCAD m$US m$US m(%)
Revenue from operating activities56,77140,78641,643.532,457.7Up 39.2
EBITDA4,3862,2063,217.31,755.5Up 98.8
Depreciation(3,102)(2,345)(2,275.4)(1,866.2)Deterioration 32.3
EBIT7,4884,5515,492.73,621.7Up 64.5
Pre-Tax Profit/(Loss)7,4884,5515,492.73,621.7Up 64.5
Working Capital5,95611,5034,368.99,154.2Down 48.2
Current Assets158,678118,692116,395.794,455.8Up 33.7
Current Liabilities152,722107,189112,026.885,301.6Up 42.5
Shareholders' Funds97,15079,87271,262.863,562.6Up 21.6
Total Liabilities152,722107,189112,026.885,301.6Up 42.5
Total Assets256,281192,720187,990.8153,367.7Up 33
Operating Cash Flow5,1594,0053,784.33,187.2Up 28.8
Net Assets97,15079,87271,262.863,562.6Up 21.6
Net Tangible Assets69,57360,31351,034.247,997.4Up 15.4
AuditorDeloitte LLP 

Year-on-year comparison of Per Share figures

December 312018201720182017Change (%)
DescriptionCAD CAD $US $US
Revenue from operating activities58.141.642.633.1Up 39.6
Cash137.9102.5101.181.5Up 34.6
Shareholders' Funds99.481.572.964.9Up 22
Total Assets262.2196.7192.3156.5Up 33.3
Net Tangible Assets71.261.552.249Up 15.7

Year-on-year comparison of Performance Ratios

December 3120182017Change (%)
Total Liabilities/Total Assets (Up 7.1% from 0.56 to 0.6)0.60.6Up 7.1
Common Size Ratios by Assets %
Total current assets to Total Assets 61.9 61.6 Up 0.5
Short-term investments to Total Assets 49.3 49.4 Down 0.3
Total non-current assets to Total Assets 38.1 38.4 Down 0.8
Fixed Assets to Total Assets 26.3 27.5 Down 4.4
Intangibles to Total Assets 10.8 10.1 Up 6.4
Common Size Ratios by Sales %
Cost of Goods Sold to Sales 80.2 79.4 Up 1.0
Profit before tax to Sales 13.2 11.2 Up 18.3
Tax expenses to Sales 0.4 (1.5) Up 126.6
Sales and marketing expenses to Sales 0.2 0.2 Down 14.1
Depreciation to Sales (5.5) (5.7) Up 4.3

Currency Conversion (December 31, 2018): $US1 = CAD1.36

Currency Conversion (December 31, 2017): $US1 = CAD1.26

Five-year record of growth and performance:

In the last 5 years Total Revenue averaged CAD37.2B ($US27.3B), EBITDA averaged CAD4.9B ($US3.6B) and Net Profit averaged CAD5.8B ($US4.3B). Compound Annual Growth Rate (CAGR) averaged 21.6% for Total Revenue, 11.1% for Net Profit and -12.3% for EBITDA.

DescriptionAnnual (CAD B)Annual ($US B)5-year Avg (CAD B)5-year Avg ($US B)5-year CAGR %
Total Revenue56.841.637.227.321.6
EBITDA4.43.24.93.6(12.3)
Operating Profit7.55.575.11.1
Net Profit3.62.65.84.311.1

Five-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE

In 2018 Net Profit Margin of 13.2% was below its 5-year Avg of 18.0% (All Figures in %)

Description20185-year Avg
EBITDA Margin7.716.7
Operating Profit Margin13.222.8
Net Profit Margin13.218
Return on Equity7.79.3
Return on Assets2.92.9
Return on Capital Employed7.25.4

SECTION 8 CORPORATE PROFILE

8.1 Activities

Brookfield Asset Management Inc is a global alternative asset management company focused on property, infrastructure and renewable power.

8.2 Top Management

The chief executive officer is Bruce Flatt.

8.3 Issued Capital and MCap

Based on 995,701,150 issued shares the market capitalisation is CAD76.1 billion (US$57.2 billion).

8.4 Vanguard Total World Stock ETF 7627:

The stock was one of 7627 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 8,208 shares in the period Jul 31, 2019 to Aug 31, 2019 worth $US-550,478 at an estimated Volume Weighted Average Price (VWAP) of $US67.066. As at Aug 31, 2019, the Vanguard Total World Stock ETF held 272,635 shares worth $US13,746,280 or 0.09% by value of the ETF's portfolio [Ranked 212 out of 7627 by value and 9 out of 195 for Canada].

COMPANY IDENTIFIERS

Contact: (416) 363-9491

Physical Address: 181 Bay Street, Brookfield P, Suite 300, P.O. Box 762, Toronto, ON, CA, M5J 2T3

State/Province/Country: Canada

Country of Incorporation: Canada

Industry [NAICS]: 531120

Exchange: Toronto Stock Exchange

Business Sector: Real Estate

Industry Group: Real Estate Operations

Industry: Real Estate Services

Activity: Real Estate Services - NEC*

Economic Sector: Financials

* NEC: Not elsewhere classified

ISIN: CA1125851040

T:BAM.A; TSE:BAM.A; N:BAM.A; CN:BAM.A; BAMa.TO

PermID: 4295861073

RIC: BAMa.TO

CIK: Brookfield Asset Management Inc.

Brookfield Asset Management Inc, Brookfield Asset Management Inc Cl A, Brookfield Asset Management Inc Class A Limited Voting Shares

Source: www.BuySellSignals.com