Q: Please provide your assessment of AGF.B. Is this a company you would recommend purchasing today? Is there another company in the same sector that you would prefer
5i Research Answer:
AGF.B operates as an investment management firm and is now trading at 6.1x times' Forward P/E. In the last few years, revenue was quite stable, but growth is quite weak, averaging around only 1%-3%. The balance sheet has net debt of $123M and a net debt/EBITDA of only 0.5x. The company has generated healthy cash flow over the years which supports dividend growth and share repurchases. Overall, a cheap value type of name with lots of cash flow for capital returns. But, until recently the stock has not done much for shareholders, and the competitive situation of the industry (lower margins, weak growth) has not improved much. Stronger capital markets do help and have been a recent tailwind. In financials, we would prefer CIX, IFC, GSY.