AGF Management (AGF.B:TSE) Fundamental Valuation Report

Fundamental Valuation Report

AGF Management(AGF.B:TSE)

Financial Services:Asset Management

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Close Price/Date
$5.52 (CAD) 25/01/2019

Weighted Valuation
$6.71 (CAD)

Overall Rating
Undervalued by 21.6%

Valuation Models Analyst Consensus: $6.71 (CAD)
(in order of importance) Adjusted Book Value: $6.89 (CAD)
Comparables: $6.38 (CAD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (AGF.B:TSE CAD)

Price 5.52
Range 5.40 – 5.54
52 week 4.43 – 7.64
Open 5.47
Vol / Avg. 189094/166159
Mkt cap 432.32M
P/E 5.70
Div/yield 0.32/0.06
EPS 0.92
Shares 78.32M
Beta 1.36

Company Description

AGF Management is a Canada-based asset manager with operations and investments in Canada, the United States, the United Kingdom, Ireland, and Asia. At the end of July 2018, the firm had around CAD 37.8 billion in total assets under management. AGF Management’s funds are weighted more heavily toward equities, with close to two thirds of retail AUM being equity-related. That said, the company does use fundamental, quantitative and alternative strategies to manages its investment funds. AGF Management also has a larger portion of its business tied to institutional clients than its peers, with roughly one third of AUM derived from institutional and subadvised accounts. The company also derives just over a sixth of its managed assets from high-net-worth clients.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for AGF.B:TSE

Using a discounted cash flow model we generated an intrinsic value of $12.19 (CAD) for AGF.B:TSE

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

AGF.B:TSE Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $12.19 1% 5% 1% 5%
WACC (or Ke) 9.87 $14.77 $10.26
Terminal Growth Rate 3.00 $10.48 $14.47
Tax Rate 0.17 $13.16 $11.21
Cash Flow 117,435,085 $11.36 $13.02
Capital Expenditures -3,652,400 $12.17 $12.21
Long Term Debt 228,042,000 $12.33 $12.04

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $6.38 (CAD) for AGF.B:TSE. We also generated a valuation of $9.39 (CAD) using other metrics and comparables.
The comparable companies were Clairvest Group (CVG:TSE), Fiera Capital (FSZ:TSE), Guardian Capital Group (GCG.A:TSE), Sprott (SII:TSE) and United Corporations (UNC:TSE).

Company AGF.B:TSE End Date Value
Earnings/Share $0.92 (CAD)
Book Value/Share $12.32 (CAD)
Sales/Share $5.62 (CAD)
Cash Flow/Share $0.78 (CAD)
EBITDA/Share $1.32 (CAD)
Price Based on Comps Adjustment Factor (%)
$9.83 (CAD) -17.2
$14.94 (CAD) -70.8
$22.66 (CAD) -87.5
$11.48 (CAD) -92.7
$17.42 (CAD) 3.4
5.13 PE Ratio 10.68 4.25 0.00 6.75 25.70 6.04
0.39 PB Ratio 1.21 0.94 1.79 0.93 1.78 0.62
0.86 PS Ratio 4.03 2.59 2.03 2.40 8.06 5.10
6.14 PCF Ratio 17.62 2.48 11.71 14.45 11.70 47.76
4.50 EV to EBITDA 65.43 0.00 20.74 5.65 169.89 0.00


Using a multiples approach we generated a valuation of  $7.40 (CAD) for AGF.B:TSE

Company AGF.B:TSE End Date Value
Earnings/Share $0.92 (CAD)
Book Value/Share $12.32 (CAD)
Sales/Share $5.62 (CAD)
Cash Flow/Share $0.78 (CAD)
EBITDA/Share $1.32 (CAD)
Price Based on Comps Adjustment Factor
$9.85 (CAD) 0
$6.68 (CAD) 0
$6.42 (CAD) 0
$6.87 (CAD) 0
$7.19 (CAD) 0
Ratios Ratio Average
PE Ratio 10.71
PB Ratio 0.54
PS Ratio 1.14
PCF Ratio 8.76
EV to EBITDA 5.44

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  AGF.B:TSE for the last 10 years was  0.55

We ran the Adjusted Book Value for  AGF.B:TSE and generated a book value of  $12.42 (CAD)
By multiplying these we get an adjusted valuation of  $6.89 (CAD)

Analyst Data

In the Stockcalc database there are 6 analysts that provide a valuation for AGF.B:TSE. The 6 analysts have a concensus valuation for AGF.B:TSE for 2019 of $6.71 (CAD).

AGF.B:TSE AGF Management

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 4 0 3.5000 Hold 2019-1-24

Current Price: 5.52 CAD

Analyst Consensus
CAD Millions 2019 2020
Mean EPS 0.52 0.68
# EPS Analysts 6 6
Mean Revenue 416.10 430.00
# Revenue Analysts 5 5
Mean Target Price 6.71
Mean Cash Flow
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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