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Brookfield Asset Management Inc (TSE:BAM.A): Should The Recent Earnings Drop Worry You?
After reading Brookfield Asset Management Inc's (TSX:BAM.A) most recent earnings announcement (30 September 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for Brookfield Asset Management
Was BAM.A weak performance lately part of a long-term decline?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This enables me to analyze different stocks on a more comparable basis, using the most relevant data points. For Brookfield Asset Management, its most recent earnings (trailing twelve month) is US$450.00M, which compared to last year’s level, has plunged by a substantial -77.75%. Since these values are somewhat myopic, I’ve determined an annualized five-year figure for Brookfield Asset Management's earnings, which stands at US$1.88B This doesn't look much better, as earnings seem to have gradually been deteriorating over the longer term.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Usually companies that endure a drawn out period of reduction in earnings are going through some sort of reinvestment phase . However, if the entire industry is struggling to grow over time, it may be a signal of a structural shift, which makes Brookfield Asset Management and its peers a riskier investment. You should continue to research Brookfield Asset Management to get a better picture of the stock by looking at:
- 1. Financial Health: Is BAM.A’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- 2. Valuation: What is BAM.A worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BAM.A is currently mispriced by the market.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Valuation is complex, but we're here to simplify it.
Discover if Brookfield might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
About TSX:BN
Brookfield
An alternative asset manager and REIT/Real Estate Investment Manager firm focuses on real estate, renewable power, infrastructure and venture capital and private equity assets.
Moderate and fair value.
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