Thursday 5 April 2018
Tuesday 3 April 2018
AGF Finance is shaping up
AGF Finance is one of the three new finance companies that I looked at in a blog on August15,2017.It has made some improvements as has the other two,namely,Guardian Capital and Fiera Capital.Both the price of Fiera Capital and AGF are down since August ;Fiera is down about 15% and AGF about 20% and Guardian Capital is flat.Fiera is the larger company with $128 billion of assets under management (AUM) while AGF has AUM of $37 billion.Guardian is the smallest.But AGF just had a good first quarter as adjusted EBITDA,net income and e.p.s. grew at an above average rate.And all 3 have been helped by the interest rate increases.But what will happen for AGF for the rest of the year?Well AGF has made some improvements worth describing.
Annual Highlights
61% of their AUM performed above the median rate for the last 3 years.Adjusted e.p.s. increased 27% compared to 2016 .Also AGF is expecting a $16 million cash refund arising from a transfer pricing case.This should raise adjusted EBITDA to about $40 million for Q2 or about $.45 per share.AGF also started two new ETFs on the NEO exchange.And lastly AGF announced fee reductions across several of their funds. Consequently AGF recorded $20 million of sales(net of redemptions) and $58 million expected for March sales.
Who will Outperform in 2018?
Guardian Capital is smaller and has smaller price movements.However it might move up to the $26 -$27 price range as it has a good steady cash flow.Fiera has the best yield at 6.9% compared to AGF at 4.9% and Guardian at 2.1%.And Fiera is adding to AUM faster but it's income trails.So it is Fiera that has the highest P/E ratio at 12.This blog looks for annual e.p.s. of $1.05 to $1.30 for AGF(especially with the $16 million cash refund) and at a multiple of 8.5 this gives it an expected price of $8.50 to $9.00.This makes it the likely winner with a gain of almost 50% and would likely beat Fiera which may not hit $15 in 2018.
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