4 Canadian Financial Stocks Trading at a Discount to Book Value

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The Canadian financial stocks on our list are trading at low price to book multiples

SmallCapPower | October 6, 2017: Price to book ratio is a widely used metric within the investment community for financial institution stocks. The ratio is calculated dividing the price per share by the book value per share. The book value per share is calculated by subtracting liabilities from assets and prorating the result on a per share basis. The Canadian financial stocks on our list have a ratio below 1, which indicates that the underlying assets of the Company are undervalued compared to their book values.

Home Capital Group Inc (TSX: HCG) – $13.95
Alternative Lending

Home Capital Group operates through its subsidiary Home Trust Company. Home Trust is an alternate lender that operates as a federally regulated trust. The Company offer its clients deposits, mortgages, retail credit and credit card issuing services.

  • Market Cap: $1,119 million
  • Price to Book: 0.64
  • Total Debt (CAD): $2,650 million

Acasta Enterprises Inc (TSX: AEF) – $5.66
Investment Management & Fund Operators

Acasta Enterprises is a Canadian private equity company that aims to acquire businesses that operate in North America. Furthermore, the Company’s strategy is to partner with the management of acquired businesses to foster development. Since its IPO in 2015, the Company has made significant investments within the consumer staples and aviation finance industries.

Acasta’s stock price has declined 44% YTD as the Company continues to post quarterly losses.

  • Market Cap: $541 million
  • Price to Book: 0.68
  • Total Debt (CAD): $0.00

AGF Management Ltd (TSX: AGF.B) – $7.98
Investment Management & Fund Operators

AGF Management Limited is an asset management company with retail, institutional, alternative and high-net-worth businesses. The Company offers solutions across four investment management platforms: Fundamental Active Management, Quantitative Solutions, Private Clients and Alternative Assets. The Company has offices and clients across the Canada.

AGF’s stock has faced a steady upward trajectory for most of the year, as it has announced positive news, which included significant growth in its retail fund sales and an improved overall performance Y/Y, including the launch of its quantitative investment platform: AGFiQ Management.

  • Market Cap: $636 million
  • Price to Book: 0.69
  • Total Debt (CAD): $188 million

GMP Capital Inc (TSX: GMP) – $2.60
Investment Banking & Brokerage Services

GMP Capital Inc. (GMP) is a financial services firm that provides a range of products and services to corporate clients, institutional investors and high-net-worth individuals. The Company operates in two segments: Capital Markets and Wealth Management. The Capital Markets segment focuses on institutional clients by providing investment banking, advisory and underwriting services, institutional research and sales and trading services. The Wealth Management segment includes the Company’s non-controlling ownership interest in Richardson GMP Limited (Richardson GMP). GMP Capital has several subsidiaries which include, GMP Securities L.P., GMP Securities, LLC, Griffiths McBurney Corp. and GMP Securities Europe LLP.

  • Market Cap: $207 million
  • Price to Book: 0.70
  • Total Debt (CAD): $40 million

Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in any of the companies mentioned above.

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