Q: Looking at BAM and BN - who has the higher expected growth rate and who has the higher margins? BAM has higher yield but total return is the goal!
5i Research Answer:
BAM has specifically indicated that it plans to distribute the majority of its cash flow as dividends. EPS is expected to grow in the 12% to 15% range. ROE was 20.2% last year. Margins bounce around but operating margin should be in the 50% range. It has a short history here because of the company's split into two. BN's growth is harder to predict as it depends less on fees than BAM and more on 'deals'. EPS growth based on consensus is about the same, but EPS is very highly variable. We would consider BN the better 'growth' stock overall. ROE was low last year as were margins, bit it is really an 'asset' play. For total return, we would prefer BN.