iA Financial (TSX:IAG) - Share price, News & Analysis

Q: What is the Fair Price of IAG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

IAG (CA$61.82) is trading below our estimate of [[fair value]] (CA$211.11)

IAG fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	2/6
Past Performance	4/6
Financial Health	4/6
Dividends	5/6

IAG Stock Overview

iA Financial Corporation Inc., through its subsidiary, Industrial Alliance Insurance and Financial Services Inc., provides various life and health insurance products in Canada and the United States.

Rewards

Trading at 70.7% below our estimate of its fair value

Earnings are forecast to grow 11.71% per year

Earnings have grown 8.5% per year over the past 5 years

Pays a reliable dividend of 4.04%

Risk Analysis

IAG passed our risk checks.

iA Financial Competitors

E-L Financial

TSX:ELF

CA$2.9b

Power Corporation of Canada

TSX:POW

CA$23.1b

Great-West Lifeco

TSX:GWO

CA$29.2b

Sun Life Financial

TSX:SLF

CA$34.6b

Price History & Performance

Summary of all time highs, changes and price drops for iA Financial
Historical stock prices
Current Share Price	CA$62.57
52 Week High	CA$85.25
52 Week Low	CA$58.70
Beta	1.42
1 Month Change	-3.43%
3 Month Change	-18.38%
1 Year Change	-6.97%
3 Year Change	16.26%
5 Year Change	10.72%
Change since IPO	642.67%

Shareholder Returns

	IAG	CA Insurance	CA Market
7D	0.8%	1.0%	0.1%
1Y	-7.0%	-6.3%	-2.6%

Return vs Industry: IAG underperformed the Canadian Insurance industry which returned -7.6% over the past year.

Return vs Market: IAG underperformed the Canadian Market which returned -4% over the past year.

Price Volatility

Is IAG's price volatile compared to industry and market?
IAG volatility
IAG Average Weekly Movement	4.9%
Insurance Industry Average Movement	4.0%
Market Average Movement	10.0%
10% most volatile stocks in CA Market	17.3%
10% least volatile stocks in CA Market	4.4%

Stable Share Price: IAG is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: IAG's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1892	n/a	Denis Ricard	https://www.ia.ca

iA Financial Corporation Inc., through its subsidiary, Industrial Alliance Insurance and Financial Services Inc., provides various life and health insurance products in Canada and the United States. The company operates through Individual Insurance, Individual Wealth Management, Group Insurance, Group Savings and Retirement, US Operations, and Other segments. It offers life, health, disability, and mortgage insurance products, as well as individual products and services for savings plans, securities brokerage, trust operations, and mutual funds.

iA Financial Fundamentals Summary

How do iA Financial's earnings and revenue compare to its market cap?
IAG fundamental statistics
Market Cap	CA$6.62b
Earnings (TTM)	CA$808.00m
Revenue (TTM)	CA$15.30b

8.3x

P/E Ratio

0.4x

P/S Ratio

Is IAG overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
IAG income statement (TTM)
Revenue	CA$15.30b
Cost of Revenue	CA$12.14b
Gross Profit	CA$3.16b
Other Expenses	CA$2.35b
Earnings	CA$808.00m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Jul 28, 2022

Earnings per share (EPS)	7.55
Gross Margin	20.66%
Net Profit Margin	5.28%
Debt/Equity Ratio	43.0%

How did IAG perform over the long term?

See historical performance and comparison

Dividends

4.0%

Current Dividend Yield

29%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is IAG undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for IAG?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for IAG. This is calculated by dividing IAG's market cap by their current preferred multiple.
What is IAG's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$6.62b

IAG key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.6x
Enterprise Value/EBITDA	6.5x
PEG Ratio	0.7x

Price to Earnings Ratio vs Peers

How does IAG's PE Ratio compare to its peers?

IAG PE Ratio vs Peers

The above table shows the PE ratio for IAG vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	8.2x
ELF E-L Financial	6.6x	n/a	CA$2.9b
POW Power Corporation of Canada	8x	6.5%	CA$23.1b
GWO Great-West Lifeco	9.1x	5.9%	CA$29.2b
SLF Sun Life Financial	9x	7.1%	CA$34.6b
IAG iA Financial	8.2x	11.7%	CA$6.6b

Forward PE

Price-To-Earnings vs Peers: IAG is expensive based on its Price-To-Earnings Ratio (8.2x) compared to the peer average (8.2x).

Price to Earnings Ratio vs Industry

How does IAG's PE Ratio compare vs other companies in the North American Insurance Industry?

Price-To-Earnings vs Industry: IAG is expensive based on its Price-To-Earnings Ratio (8.2x) compared to the Canadian Insurance industry average (8x)

Price to Earnings Ratio vs Fair Ratio

What is IAG's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

IAG PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	8.3x
Fair PE Ratio	12.1x

Price-To-Earnings vs Fair Ratio: IAG is good value based on its Price-To-Earnings Ratio (8.2x) compared to the estimated Fair Price-To-Earnings Ratio (12.1x).

Share Price vs Fair Value

What is the Fair Price of IAG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: IAG (CA$61.82) is trading below our estimate of fair value (CA$211.11)

Significantly Below Fair Value: IAG is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: IAG is good value based on its PEG Ratio (0.7x)

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Future Growth

How is iA Financial forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

11.7%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: IAG's forecast earnings growth (11.7% per year) is above the savings rate (1.6%).

Earnings vs Market: IAG's earnings (11.7% per year) are forecast to grow faster than the Canadian market (8.2% per year).

High Growth Earnings: IAG's earnings are forecast to grow, but not significantly.

Revenue vs Market: Insufficient data to determine if IAG's revenue is forecast to grow faster than the Canadian market.

High Growth Revenue: Insufficient data to determine if IAG's revenue is forecast to grow faster than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if IAG's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has iA Financial performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

8.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: IAG has high quality earnings.

Growing Profit Margin: IAG's current net profit margins (5.3%) are higher than last year (4.8%).

Past Earnings Growth Analysis

Earnings Trend: IAG's earnings have grown by 8.5% per year over the past 5 years.

Accelerating Growth: IAG's earnings growth over the past year (8.7%) exceeds its 5-year average (8.5% per year).

Earnings vs Industry: IAG earnings growth over the past year (8.7%) underperformed the Insurance industry 30.7%.

Return on Equity

High ROE: IAG's Return on Equity (11.6%) is considered low.

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Financial Health

How is iA Financial's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: IAG's short term assets (CA$4.2B) do not cover its short term liabilities (CA$9.1B).

Long Term Liabilities: IAG's short term assets (CA$4.2B) do not cover its long term liabilities (CA$74.4B).

Debt to Equity History and Analysis

Debt Level: IAG's net debt to equity ratio (17.8%) is considered satisfactory.

Reducing Debt: IAG's debt to equity ratio has reduced from 45% to 43% over the past 5 years.

Debt Coverage: IAG's debt is well covered by operating cash flow (22.3%).

Interest Coverage: IAG's interest payments on its debt are well covered by EBIT (16.4x coverage).

Balance Sheet

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Dividend

What is iA Financial current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

4.00%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: IAG's dividend (4.04%) is higher than the bottom 25% of dividend payers in the Canadian market (2.03%).

High Dividend: IAG's dividend (4.04%) is low compared to the top 25% of dividend payers in the Canadian market (5.33%).

Stability and Growth of Payments

Stable Dividend: IAG's dividends per share have been stable in the past 10 years.

Growing Dividend: IAG's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (29.5%), IAG's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (65.5%), IAG's dividend payments are covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

3.8yrs

Average management tenure

CEO

Denis Ricard (59 yo)

3.75yrs

Tenure

CA$5,986,270

Compensation

Mr. Denis Yves Ricard, B.Sc., F.S.A. & F.C.I.A., has been President and Chief Executive Officer of iA Financial Corporation Inc. since September 2018. He is an engaged leader who values employee developmen...

CEO Compensation Analysis

Compensation vs Market: Denis's total compensation ($USD4.65M) is about average for companies of similar size in the Canadian market ($USD4.69M).

Compensation vs Earnings: Denis's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: IAG's management team is considered experienced (3.8 years average tenure).

Board Members

Experienced Board: IAG's board of directors are considered experienced (3.4 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: IAG insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31