Q: My understanding is that BN’s price / book value is roughly as low as it was in 2002, 2009 and 2011. Is this the best historic valuation metric? How does today’s yield compare to its dividend yield range in the past ?
5i Research Answer:
Dividend yield may not reflect the correct assessment of BN’s valuation compared to historical averages (ranging from 0.85% yield to 1.8% yield) as BN recently spun out BAM (high dividend yield), as a result, the dividend yield of BN now is significantly less than historical averages.
We think one of the most accurate metrics to assess BN’s valuation is Price/Distributable earnings per share (a proxy of free cash flow, which BN measures in its annual report)
Or EV/EBITDA, which is currently around 15.1x, compared to historical averages ranging from 14.8x to 19.4x.