The Canadian stocks on our list are trading at the lowest price to FCF, which could represent an investment opportunity
SmallCapPower | May 7, 2019: Today we have identified four Canadian stocks that have the lowest Price to Free Cash Flow (FCF) ratio. The selected stocks have a market capitalization in the range of $20 billion to $70 billion. Price to free cash flow indicates a company’s ability to generate additional revenues. It is calculated by dividing its market capitalization by free cash flow values.
*Market caps based on the closing price on May 02, 2019.
Power Financial Corporation (TSX:PWF) – $31.50
Power Financial is a diversified international management and holding company with interests in the financial services sector in Canada, the United States and Europe. It also has significant holdings in global industrial and services companies based in Europe. Power Financial Corporation is a member of the Power Corporation Group of Companies. On May 20, 2019, the Company reported its 2018 financial results. Net earnings attributable to common shareholders were $2,245 million, or $3.15 per share, compared with $1,717 million, or $2.41 per share, in 2017. Power Financial also declared a 5.2% increase in its quarterly dividend to $0.4555 cents per common share.
- Price to cash flow ratio: 3.66x
- Market Cap: $21.1 Billion
Canadian Imperial Bank of Commerce (CIBC) (TSX:CM) – $112.72
Canadian Imperial Bank is a leading North American financial institution with 10 million personal banking, business, public sector and institutional clients. Across Personal and Small Business Banking, Commercial Banking and Wealth Management, and Capital Markets businesses, CIBC offers a full range of advice, solutions and services through its leading digital banking network, and locations across Canada, in the United States and around the world. On April 25, 2019, CBIC eliminated transfer fees for businesses sending money overseas, giving them a competitive edge by making it easier and faster to do business in more than 75 countries throughout the world.
- Price to cash flow ratio: 4.73x
- Market Cap: $49.8 Billion
Bank of Montreal (TSX: BMO) – $105.70
Bank of Montreal is a highly diversified financial services provider in North America, ranking as the 8th largest bank by assets. The Bank provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets. BMO reported its first-quarter 2019 results on Feb. 26, 2019. Net revenue surged 6% YoY to come in at $5,591 million. Net income was up 55% YoY to $1,510 million while adjusted net income grew by 8% YoY to $1,538 million.
- Price to cash flow ratio: 5.38x
- Market Cap: $67.5 Billion
Great-West Lifeco Inc. (TSX:GWO) – $32.75
Great-West Lifeco is an international financial services holding company with interests in life insurance, health insurance, retirement and investment services, asset management and reinsurance businesses. On May 2, 2019, the Company reported first-quarter 2019 results. Sales for the first quarter of 2019 surged 160% YoY to $90.2 billion. Net earnings attributable to common shareholders came in at $657 million, or $0.67 per common share, for the first quarter of 2019 versus $731 million, or $0.74 per common share, for the same period last year.
- Price to cash flow ratio: 6.49x
- Market Cap: $31.3 Billion
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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