Weekly Recap: August 10, 2018

Recapping this week’s earnings

Brookfield Asset Management 2Q18 FFO $0.77, Revenue of $13.28B

-The following are some highlights from Q2, more detail can be found in their Letter to Unitholders.

-Over the last 20 years, book value per share has compounded at 12%, market value plus dividends at 19% and shares outstanding at 1%.

-Fee related earnings for the last twelve-month period increased by 48% to $1.1 billion.

-Management also spoke about the current stock price valuation, “if our shares reflected a 20 times multiple for fee related earnings and a 10 times multiple for net annualized carry on existing funds, this would add $18 billion of value, or $18 per share. This is close to a 50% increase over current stock market price. And this, still has no value attributed to the growth in our future franchise, including larger and new funds.”

-The stock price subsequently closed up 5.22%, reaching a new all-time high.

-To summarize, this was a blowout quarter from one of the businesses on the TSX that truly can be defined as “buy and forget”. Brookfield continues to be one of the best capital allocators who have performed exceptionally over long periods of time.

Magna International 2Q18 EPS of $1.67, up 15% and Revenue of $10.28 billion, up 12.4%

-This wasn’t the best quarter and the stock price closed down ~6.5%. A lower outlook was to blame and the rise in trade tensions won’t help in the short-term. At the close on August 10, the stock currently trades at a P/E ratio of 8.4. For a business that continues to return capital to shareholders through dividends and share repurchases, they are getting cheap. As long-term investors, one can take a look here, but be aware of volatility and that uncertainty will continue.

-This also doesn’t help:

Savaria reports 2Q18 EPS of $0.14, up 100% and Revenue of $64.2 million, up 61.2%

-After the report, the stock price closed up 4.13%.

-Management also updated their 2018 forecast for revenue ($268 million) and EBITDA ($42.5-$44.5 million).

-I continue to like the prospects and growth profile of Savaria, and it doesn’t hurt to see momentum in the stock price.

-Savaria provides a good mixture of growth with monthly dividends (which continue to grow).

Disclosure

I hold a position in BAM, MG and SIS.

Please consult a financial advisor before making investment decisions.

This report represents my views, not actionable advice.