Fiera Capital Corp (TSX: FSZ) is a Canada-based independent, full-service, multi-product investment company which provides investment advisory and related services to institutional investors, private wealth clients and retail investors. The company operates through its investment management services segment in Canada and the United States.

Key Highlights

• An income play:The company has a long history of paying dividends, indicating that the company's operation is sustainable and has produced consistent cash flows over time. Recently they declared a dividend of CAD 0.215 per share payable on April 6, 2022. Furthermore, the stock offers an attractive dividend yield of 8.26%, which is quite appealing to long-term investors.

Source: Company Presentation

• Consistently increasing "Assets Under Management" numbers: Recently the management reported its assets under management ("AUM") of approximately CAD 188.0 billion as on December 31, 2021, an increase of CAD 6.0 billion, compared to AUM of CAD 182.0 billion in FY 2020. The institutional segment remains the bread-and-butter segment, registering a growth of 7% in AUM to CAD 95.6 billion in the reported period on Y-o-Y basis. Furthermore, heading into 2022, we believe the company will remain focused on organic growth along executing on its strategic priorities.

Source: Company Presentation

• Rise in cash from operations: In FY 2021, the company’s cash from operating activities increased by CAD 25.9 million or 17.8% to CAD 171.3 million compared to CAD 145.4 million in the previous corresponding period.

• Favorable outlook: In the second half of 2021, the macroeconomic picture changed dramatically. Against the backdrop of the ongoing global pandemic, the Company's positive 2021 financial results illustrate the depth and diversity of its investment plans, as well as its conservative approach to capital allocation. Furthermore, the company will retain its good momentum by being focused and executing key strategic targets such as optimizing portfolios to meet customer outcomes, introducing novel investment strategies, and so on.

Risks associated with investment: The Company may see an impact to the cost of capital in the future as a result of disrupted credit markets or potential credit rating actions in relation to the Company’s debt if the timing and pace of economic recovery is slow. Furthermore, a prolonged period of high market volatility could have a detrimental impact on its investment performance, lowering the value of its assets and investment methods.

Financial Overview of FY 2021 (In 000’s of CAD)

Source: Company Filing

• The company’s revenues in FY 2021, stood higher at CAD 749.8 million compared to CAD 695.1 million in pcp, an increase in consolidated revenue was clocked through higher performance fees and higher other revenue.

• The company expenses stood at CAD 631.2 million in the reported period of FY 2021, compared to CAD 626.6 million in pcp, partially supported by lower amortization and depreciation cost as well as lower restructuring cost.

• Earnings before income tax in the reported period stood at CAD 98.8 million compared to CAD 9.6 million in pcp, supported by higher EBIT.

• Partially offset by higher income tax, the company’s net income was of CAD 76.6 million in FY 2021, compared to CAD 2.0 million in pcp.

Valuation Methodology (Illustrative): Price to Book Value Valuation Metrics

Analysis by Kalkine Group 

Stock recommendation

Despite an uncertain economic background, the Company exhibited its financial resilience and generated strong results in FY 2021, owing to its breadth and diversity of investment methods, as well as its commitment to providing exceptional service. By maintaining its focus and implementing initiatives that support its 2022 Strategic Plan, the company aims to retain its positive momentum. 

Furthermore, the stock is carrying an attractive dividend yield of 8.26%, which is quite impressive for the investors with a long-term horizon. Therefore, based on the above rationale and valuation done using the above methodology, we recommend a "Buy" rating at the last closing price of CAD 10.41 on April 5, 2022. Additionally, the markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

One-Year Technical Price Chart (as on April 05, 2022). Source: REFINITIV, Analysis by Kalkine Group 

Technical Analysis Summary

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.