Intrinsic value of Brookfield Asset Management Cl A - BAM

Previous Close

$39.13

  Intrinsic Value

$79.52

stock screener

  Rating & Target

str. buy

+103%

  Value-price divergence*

+49%

Previous close

$39.13

 
Intrinsic value

$79.52

 
Up/down potential

+103%

 
Rating

str. buy

 
Value-price divergence*

+49%

Our model is not good at valuating stocks of financial companies, such as BAM.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BAM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 38.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  22.59
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
Revenue, $m
  24,411
  28,073
  32,003
  36,195
  40,644
  45,342
  50,287
  55,474
  60,901
  66,567
  72,475
  78,625
  85,024
  91,677
  98,591
  105,776
  113,242
  121,003
  129,071
  137,462
  146,192
  155,279
  164,742
  174,601
  184,879
  195,597
  206,781
  218,456
  230,649
  243,389
  256,705
Variable operating expenses, $m
 
  21,166
  24,076
  27,181
  30,475
  33,954
  37,616
  41,457
  45,475
  49,672
  54,046
  58,222
  62,961
  67,887
  73,007
  78,327
  83,856
  89,603
  95,577
  101,791
  108,255
  114,984
  121,992
  129,293
  136,903
  144,840
  153,122
  161,768
  170,797
  180,230
  190,091
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  21,418
  21,166
  24,076
  27,181
  30,475
  33,954
  37,616
  41,457
  45,475
  49,672
  54,046
  58,222
  62,961
  67,887
  73,007
  78,327
  83,856
  89,603
  95,577
  101,791
  108,255
  114,984
  121,992
  129,293
  136,903
  144,840
  153,122
  161,768
  170,797
  180,230
  190,091
Operating income, $m
  2,993
  6,906
  7,926
  9,014
  10,169
  11,388
  12,671
  14,017
  15,425
  16,896
  18,429
  20,403
  22,063
  23,790
  25,584
  27,448
  29,386
  31,400
  33,494
  35,671
  37,936
  40,294
  42,750
  45,308
  47,975
  50,757
  53,659
  56,689
  59,853
  63,159
  66,614
EBITDA, $m
  5,013
  9,462
  10,786
  12,199
  13,698
  15,282
  16,949
  18,697
  20,526
  22,436
  24,427
  26,500
  28,656
  30,898
  33,229
  35,650
  38,167
  40,782
  43,502
  46,330
  49,272
  52,335
  55,524
  58,847
  62,311
  65,924
  69,693
  73,628
  77,738
  82,031
  86,519
Interest expense (income), $m
  3,062
  3,010
  3,939
  4,936
  6,000
  7,129
  8,321
  9,576
  10,892
  12,269
  13,707
  15,206
  16,767
  18,390
  20,079
  21,833
  23,656
  25,551
  27,520
  29,568
  31,697
  33,912
  36,218
  38,619
  41,121
  43,729
  46,449
  49,287
  52,250
  55,344
  58,577
Earnings before tax, $m
  2,993
  3,896
  3,988
  4,078
  4,169
  4,259
  4,350
  4,441
  4,533
  4,627
  4,722
  5,197
  5,297
  5,399
  5,505
  5,615
  5,730
  5,849
  5,973
  6,103
  6,239
  6,382
  6,532
  6,689
  6,854
  7,028
  7,210
  7,401
  7,603
  7,815
  8,037
Tax expense, $m
  -345
  1,052
  1,077
  1,101
  1,126
  1,150
  1,175
  1,199
  1,224
  1,249
  1,275
  1,403
  1,430
  1,458
  1,486
  1,516
  1,547
  1,579
  1,613
  1,648
  1,685
  1,723
  1,764
  1,806
  1,851
  1,897
  1,947
  1,998
  2,053
  2,110
  2,170
Net income, $m
  1,651
  2,844
  2,911
  2,977
  3,043
  3,109
  3,176
  3,242
  3,309
  3,378
  3,447
  3,794
  3,867
  3,942
  4,019
  4,099
  4,183
  4,270
  4,360
  4,455
  4,555
  4,659
  4,768
  4,883
  5,004
  5,130
  5,263
  5,403
  5,550
  5,705
  5,867

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,299
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  159,826
  178,807
  203,840
  230,543
  258,876
  288,805
  320,299
  353,336
  387,903
  423,996
  461,622
  500,799
  541,554
  583,927
  627,966
  673,730
  721,288
  770,718
  822,108
  875,552
  931,157
  989,036
  1,049,310
  1,112,108
  1,177,570
  1,245,842
  1,317,078
  1,391,442
  1,469,105
  1,550,249
  1,635,063
Adjusted assets (=assets-cash), $m
  155,527
  178,807
  203,840
  230,543
  258,876
  288,805
  320,299
  353,336
  387,903
  423,996
  461,622
  500,799
  541,554
  583,927
  627,966
  673,730
  721,288
  770,718
  822,108
  875,552
  931,157
  989,036
  1,049,310
  1,112,108
  1,177,570
  1,245,842
  1,317,078
  1,391,442
  1,469,105
  1,550,249
  1,635,063
Revenue / Adjusted assets
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
Average production assets, $m
  46,931
  53,984
  61,541
  69,603
  78,158
  87,193
  96,702
  106,676
  117,112
  128,009
  139,369
  151,197
  163,501
  176,294
  189,590
  203,407
  217,765
  232,688
  248,203
  264,339
  281,127
  298,601
  316,798
  335,758
  355,521
  376,133
  397,640
  420,092
  443,539
  468,037
  493,643
Working capital, $m
  0
  5,334
  6,081
  6,877
  7,722
  8,615
  9,555
  10,540
  11,571
  12,648
  13,770
  14,939
  16,155
  17,419
  18,732
  20,097
  21,516
  22,991
  24,523
  26,118
  27,776
  29,503
  31,301
  33,174
  35,127
  37,163
  39,288
  41,507
  43,823
  46,244
  48,774
Total debt, $m
  67,017
  82,054
  102,831
  124,994
  148,511
  173,352
  199,492
  226,913
  255,603
  285,560
  316,790
  349,307
  383,134
  418,303
  454,856
  492,840
  532,313
  573,340
  615,993
  660,352
  706,505
  754,544
  804,571
  856,694
  911,027
  967,693
  1,026,819
  1,088,541
  1,153,001
  1,220,350
  1,290,746
Total liabilities, $m
  133,373
  148,410
  169,187
  191,350
  214,867
  239,708
  265,848
  293,269
  321,959
  351,916
  383,146
  415,663
  449,490
  484,659
  521,212
  559,196
  598,669
  639,696
  682,349
  726,708
  772,861
  820,900
  870,927
  923,050
  977,383
  1,034,049
  1,093,175
  1,154,897
  1,219,357
  1,286,706
  1,357,102
Total equity, $m
  26,453
  30,397
  34,653
  39,192
  44,009
  49,097
  54,451
  60,067
  65,943
  72,079
  78,476
  85,136
  92,064
  99,268
  106,754
  114,534
  122,619
  131,022
  139,758
  148,844
  158,297
  168,136
  178,383
  189,058
  200,187
  211,793
  223,903
  236,545
  249,748
  263,542
  277,961
Total liabilities and equity, $m
  159,826
  178,807
  203,840
  230,542
  258,876
  288,805
  320,299
  353,336
  387,902
  423,995
  461,622
  500,799
  541,554
  583,927
  627,966
  673,730
  721,288
  770,718
  822,107
  875,552
  931,158
  989,036
  1,049,310
  1,112,108
  1,177,570
  1,245,842
  1,317,078
  1,391,442
  1,469,105
  1,550,248
  1,635,063
Debt-to-equity ratio
  2.533
  2.700
  2.970
  3.190
  3.370
  3.530
  3.660
  3.780
  3.880
  3.960
  4.040
  4.100
  4.160
  4.210
  4.260
  4.300
  4.340
  4.380
  4.410
  4.440
  4.460
  4.490
  4.510
  4.530
  4.550
  4.570
  4.590
  4.600
  4.620
  4.630
  4.640
Adjusted equity ratio
  0.142
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,651
  2,844
  2,911
  2,977
  3,043
  3,109
  3,176
  3,242
  3,309
  3,378
  3,447
  3,794
  3,867
  3,942
  4,019
  4,099
  4,183
  4,270
  4,360
  4,455
  4,555
  4,659
  4,768
  4,883
  5,004
  5,130
  5,263
  5,403
  5,550
  5,705
  5,867
Depreciation, amort., depletion, $m
  2,020
  2,555
  2,860
  3,185
  3,530
  3,894
  4,278
  4,680
  5,101
  5,540
  5,998
  6,097
  6,593
  7,109
  7,645
  8,202
  8,781
  9,383
  10,008
  10,659
  11,336
  12,040
  12,774
  13,539
  14,336
  15,167
  16,034
  16,939
  17,885
  18,872
  19,905
Funds from operations, $m
  2,336
  5,399
  5,771
  6,162
  6,573
  7,004
  7,453
  7,922
  8,410
  8,917
  9,445
  9,891
  10,459
  11,050
  11,664
  12,301
  12,964
  13,652
  14,369
  15,114
  15,891
  16,699
  17,542
  18,422
  19,339
  20,297
  21,297
  22,342
  23,435
  24,577
  25,772
Change in working capital, $m
  -747
  696
  747
  797
  845
  893
  939
  985
  1,031
  1,077
  1,122
  1,169
  1,216
  1,264
  1,314
  1,365
  1,419
  1,474
  1,533
  1,594
  1,659
  1,727
  1,798
  1,873
  1,953
  2,037
  2,125
  2,218
  2,317
  2,421
  2,530
Cash from operations, $m
  3,083
  4,703
  5,024
  5,366
  5,728
  6,111
  6,514
  6,936
  7,379
  7,841
  8,323
  8,722
  9,244
  9,786
  10,350
  10,936
  11,545
  12,178
  12,836
  13,520
  14,232
  14,973
  15,744
  16,548
  17,386
  18,260
  19,172
  20,124
  21,118
  22,157
  23,242
Maintenance CAPEX, $m
  0
  -1,892
  -2,177
  -2,482
  -2,807
  -3,152
  -3,516
  -3,899
  -4,301
  -4,722
  -5,162
  -5,620
  -6,097
  -6,593
  -7,109
  -7,645
  -8,202
  -8,781
  -9,383
  -10,008
  -10,659
  -11,336
  -12,040
  -12,774
  -13,539
  -14,336
  -15,167
  -16,034
  -16,939
  -17,885
  -18,872
New CAPEX, $m
  -3,441
  -7,053
  -7,558
  -8,062
  -8,554
  -9,036
  -9,508
  -9,974
  -10,436
  -10,897
  -11,360
  -11,828
  -12,305
  -12,793
  -13,296
  -13,817
  -14,358
  -14,923
  -15,515
  -16,136
  -16,788
  -17,474
  -18,197
  -18,960
  -19,764
  -20,612
  -21,507
  -22,451
  -23,447
  -24,498
  -25,606
Cash from investing activities, $m
  -8,557
  -8,945
  -9,735
  -10,544
  -11,361
  -12,188
  -13,024
  -13,873
  -14,737
  -15,619
  -16,522
  -17,448
  -18,402
  -19,386
  -20,405
  -21,462
  -22,560
  -23,704
  -24,898
  -26,144
  -27,447
  -28,810
  -30,237
  -31,734
  -33,303
  -34,948
  -36,674
  -38,485
  -40,386
  -42,383
  -44,478
Free cash flow, $m
  -5,474
  -4,242
  -4,710
  -5,178
  -5,633
  -6,077
  -6,511
  -6,937
  -7,359
  -7,778
  -8,199
  -8,726
  -9,157
  -9,599
  -10,054
  -10,525
  -11,015
  -11,527
  -12,062
  -12,624
  -13,215
  -13,837
  -14,493
  -15,185
  -15,916
  -16,687
  -17,501
  -18,361
  -19,268
  -20,226
  -21,237
Issuance/(repayment) of debt, $m
  3,742
  19,336
  20,777
  22,163
  23,517
  24,841
  26,140
  27,421
  28,690
  29,957
  31,230
  32,517
  33,827
  35,169
  36,552
  37,984
  39,473
  41,027
  42,653
  44,359
  46,152
  48,039
  50,027
  52,123
  54,333
  56,665
  59,126
  61,722
  64,461
  67,349
  70,396
Issuance/(repurchase) of shares, $m
  88
  1,100
  1,345
  1,562
  1,773
  1,979
  2,178
  2,374
  2,567
  2,758
  2,950
  2,866
  3,062
  3,262
  3,468
  3,681
  3,902
  4,133
  4,376
  4,630
  4,898
  5,180
  5,478
  5,793
  6,125
  6,476
  6,847
  7,239
  7,653
  8,090
  8,551
Cash from financing (excl. dividends), $m  
  7,626
  20,436
  22,122
  23,725
  25,290
  26,820
  28,318
  29,795
  31,257
  32,715
  34,180
  35,383
  36,889
  38,431
  40,020
  41,665
  43,375
  45,160
  47,029
  48,989
  51,050
  53,219
  55,505
  57,916
  60,458
  63,141
  65,973
  68,961
  72,114
  75,439
  78,947
Total cash flow (excl. dividends), $m
  2,158
  16,194
  17,412
  18,548
  19,657
  20,743
  21,808
  22,858
  23,899
  24,937
  25,980
  26,657
  27,731
  28,832
  29,966
  31,139
  32,360
  33,634
  34,967
  36,366
  37,835
  39,382
  41,012
  42,730
  44,542
  46,454
  48,471
  50,599
  52,845
  55,213
  57,710
Retained Cash Flow (-), $m
  -1,146
  -3,944
  -4,256
  -4,540
  -4,817
  -5,088
  -5,354
  -5,616
  -5,876
  -6,136
  -6,396
  -6,660
  -6,928
  -7,203
  -7,487
  -7,780
  -8,085
  -8,403
  -8,736
  -9,086
  -9,453
  -9,839
  -10,247
  -10,676
  -11,129
  -11,606
  -12,110
  -12,642
  -13,203
  -13,794
  -14,418
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  12,250
  13,156
  14,008
  14,841
  15,655
  16,454
  17,241
  18,022
  18,801
  19,584
  19,997
  20,803
  21,628
  22,479
  23,360
  24,275
  25,231
  26,231
  27,280
  28,383
  29,543
  30,766
  32,055
  33,414
  34,848
  36,361
  37,958
  39,642
  41,418
  43,292
Discount rate, %
 
  11.00
  11.55
  12.13
  12.73
  13.37
  14.04
  14.74
  15.48
  16.25
  17.06
  17.92
  18.81
  19.75
  20.74
  21.78
  22.87
  24.01
  25.21
  26.47
  27.80
  29.19
  30.65
  32.18
  33.79
  35.48
  37.25
  39.11
  41.07
  43.12
  45.28
PV of cash for distribution, $m
 
  11,036
  10,573
  9,937
  9,188
  8,359
  7,481
  6,585
  5,699
  4,848
  4,052
  3,263
  2,629
  2,076
  1,606
  1,216
  900
  650
  458
  315
  210
  136
  86
  52
  31
  18
  10
  5
  3
  1
  1
Current shareholders' claim on cash, %
  100
  97.2
  94.3
  91.4
  88.6
  85.9
  83.3
  80.9
  78.5
  76.3
  74.2
  72.4
  70.6
  68.9
  67.3
  65.7
  64.2
  62.7
  61.3
  59.9
  58.5
  57.2
  56.0
  54.7
  53.5
  52.3
  51.2
  50.0
  48.9
  47.9
  46.8

Brookfield Asset Management Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm invests in the property, power, and infrastructure sectors. Its property business includes owning and managing office properties, developing master planned residential communities, and offering clients bridge and mezzanine lending, alternative assets funds, and financial and advisory services. Through its subsidiaries, the firm operates hydroelectric power facilities, interconnections and transmission facilities in Northeast North America, and development of wind power in Canada. Through its subsidiaries, it invests in specialty funds including private equity and makes direct investments in real estate, energy, and resource assets. The firm launches and manages equity and fixed income mutual funds. It also manages real estate and hedge funds. The firm invests in equity and fixed income markets across the globe. It was formerly known as Brascan Corp. Brookfield Asset Management is based in Toronto, Canada with additional offices in Bogota, Colombia, Botafogo, Brazil, Calgary, Canada, Dubai, United Arab Emirates, Gatineau, Canada, Hong Kong, Hong Kong, London, United Kingdom, Melbourne, Australia, Montreal, Canada, Mumbai, India, New York City, Perth, Australia, Shanghai, China, and Sydney, Australia.

FINANCIAL RATIOS  of  Brookfield Asset Management Cl A (BAM)

Valuation Ratios
P/E Ratio 22.7
Price to Sales 1.5
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow -104.7
Growth Rates
Sales Growth Rate 22.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.7%
Cap. Spend. - 3 Yr. Gr. Rate -11.4%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 219.5%
Total Debt to Equity 253.3%
Interest Coverage 2
Management Effectiveness
Return On Assets 3.4%
Ret/ On Assets - 3 Yr. Avg. 3.8%
Return On Total Capital 1.8%
Ret/ On T. Cap. - 3 Yr. Avg. 3%
Return On Equity 6.4%
Return On Equity - 3 Yr. Avg. 10%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 48.8%
Gross Margin - 3 Yr. Avg. 49.2%
EBITDA Margin 33.1%
EBITDA Margin - 3 Yr. Avg. 46.2%
Operating Margin 12.3%
Oper. Margin - 3 Yr. Avg. 24.1%
Pre-Tax Margin 12.3%
Pre-Tax Margin - 3 Yr. Avg. 24.1%
Net Profit Margin 6.8%
Net Profit Margin - 3 Yr. Avg. 11.8%
Effective Tax Rate -11.5%
Eff/ Tax Rate - 3 Yr. Avg. 4.3%
Payout Ratio 38.3%

BAM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BAM stock intrinsic value calculation we used $24411 million for the last fiscal year's total revenue generated by Brookfield Asset Management Cl A. The default revenue input number comes from 2016 income statement of Brookfield Asset Management Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BAM stock valuation model: a) initial revenue growth rate of 15% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11%, whose default value for BAM is calculated based on our internal credit rating of Brookfield Asset Management Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Brookfield Asset Management Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BAM stock the variable cost ratio is equal to 75.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BAM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.8% for Brookfield Asset Management Cl A.

Corporate tax rate of 27% is the nominal tax rate for Brookfield Asset Management Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BAM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BAM are equal to 192.3%.

Life of production assets of 24.8 years is the average useful life of capital assets used in Brookfield Asset Management Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BAM is equal to 19%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $26453 million for Brookfield Asset Management Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 969.997 million for Brookfield Asset Management Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Brookfield Asset Management Cl A at the current share price and the inputted number of shares is $38.0 billion.

RELATED COMPANIES Price Int.Val. Rating
BPY Brookfield Pro 23.70 115.69  str.buy
GGP GGP 20.50 2.48  str.sell

COMPANY NEWS

▶ Macy's Earnings: Not as Bad as Investors Seem to Think   [Aug-15-17 08:20AM  Motley Fool]
▶ Brookfield Asset Management posts 2Q profit   [Aug-10-17 11:54PM  Associated Press]
▶ [$$] Brookfield's Toll Road to Riches   [Aug-09-17 07:16PM  The Wall Street Journal]
▶ 3 Solar Stocks for Heading Into the Third Quarter   [Aug-01-17 06:10PM  Motley Fool]
▶ Teekay Was the NYSEs Biggest Gainer Last Week   [08:26AM  Market Realist]
▶ TerraForm Power Inc. in 3 Charts   [08:28AM  Motley Fool]
▶ TerraForm Global's Most Brilliant Move in 2017 So Far   [Jun-30-17 08:11AM  Motley Fool]
▶ TerraForm Power Inc.'s Worst Move of 2017 So Far   [Jun-20-17 08:11AM  Motley Fool]
▶ Macy's Real Estate Remains Dramatically Undervalued   [Jun-14-17 06:50PM  Motley Fool]
▶ [$$] A Compelling Case for Alternative Assets   [May-27-17 12:20AM  Barrons.com]
▶ Blackstone: A Super-Sized Infrastructure Fund   [May-22-17 11:40AM  Barrons.com]
▶ Brookfield Asset Management posts 1Q loss   [07:36AM  Associated Press]
▶ 3 Things You Didn't Know About TerraForm Power, Inc.   [May-04-17 09:03AM  Motley Fool]
▶ Why TerraForm Global Inc Stock Jumped 10% in March   [Apr-11-17 07:48AM  Motley Fool]
▶ The Best Investing Ideas in Solar   [Mar-25-17 09:03AM  Motley Fool]
▶ The Best Investing Ideas in Solar   [09:03AM  at Motley Fool]
▶ [$$] SunEdison Allots $16 Million From Settlement to Junior Creditors   [Mar-24-17 01:50PM  The Wall Street Journal]
▶ [$$] SunEdison Settles with TerraForm Power, TerraForm Global   [07:19AM  at The Wall Street Journal]
▶ Brookfield to take control of SunEdison yieldcos   [08:30AM  at bizjournals.com]
▶ Brookfield to Acquire TerraForm Global   [06:55AM  GlobeNewswire]
Stock chart of BAM Financial statements of BAM
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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