Q: Hello 5i team,
Here is a recent answer you provided on BN: “Given its strong management team and fundamentals, we feel that BN is currently at an attractive level. It appears to have found some support around the low ~$40”. How do you explain that TD’s Webbroker shows a P/E Ratio of 79.1 for BN?
Here is a recent answer you provided on BN: “Given its strong management team and fundamentals, we feel that BN is currently at an attractive level. It appears to have found some support around the low ~$40”. How do you explain that TD’s Webbroker shows a P/E Ratio of 79.1 for BN?
5i Research Answer:
TD may be using past earnings. On a forward basis, BN is currently trading at only 17X earnings. Also, as a holding company, BN's earnings are volatile as many investments may be marked-to-market or solid for a profit or loss. Cash flow thus is usually a more accurate assessment of valuation, and BN is currently 8X cash flow which we consider attractive.