Major U.S. equity markets are closed for Thanksgiving but will reopen for an abbreviated session on Friday, with markets closing at 1 p.m. (ET).
As a result, the S&P/TSX composite index may be relatively quiet for the balance of the week.
Briefly recapping Wednesday's performance, the Dow Jones Industrial Average and S&P 500 Index closed the day at record highs. In Canada, the S&P/TSX composite index gave back 19 points, or 0.13 per cent to close at 15,081.
There were 107 securities in the TSX Index that advanced, 134 securities declined in value, and six stocks closed the day unchanged. In terms of sectors, eight of the 11 sectors closed in positive territory, led by strength in financials, utilities, and telecom stocks. Gold stocks remained out of favour and were amongst the leading laggards in the Index.
The S&P/TSX composite index is up 1.99 per cent month to date, up 2.41 per cent quarter to date, and has a year-to-date gain of 15.92 per cent.
On today's TSX Breakouts report, there are 53 stocks on the positive breakouts list (stocks with positive price momentum), and 30 securities on the negative breakouts list (stocks with negative price momentum).
Month to date, industrial stocks and financial stocks have been the leading sectors in the TSX Index, both segments have gains of over 5 per cent.
Discussed today is a financial stock that may slowly gain momentum and be one to watch. The stock is just below the $1-billion market capitalization mark, at $999-million. It offers investors an attractive 5 per cent dividend yield, and has unanimous 'buy' recommendations by analysts. The security highlighted is Fiera Capital Corp. (FSZ-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
Montreal-based Fiera is an asset manager with operations across North America serving institutional, high net worth clients, and retail investors.
Before the market opened on Nov. 10, the company reported modestly better-than-expected third-quarter results sending the share price higher by 1 per cent to $12.05 from $11.90. Fiera reported revenues of $81.9-million, up 36 per cent year over year, and slight ahead of the Street's forecast of $79-million. The majority, 56 per cent, of the company's revenues were from Canada and 44 per cent was from the U.S. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $25.9-million, up 39 per cent year over year and slightly ahead of the consensus estimate of $24.8-million. Adjusted earnings per share came in at 23 cents, in-line with the Street's forecast.
Growth by acquisition remains a strategic plan for the company. On Sept. 30, the company announced that it made an offer to purchase Charlemagne Capital Limited, a U.K.-based asset manager. If the deal is completed, this would mark the company's expansion into Europe. As Sylvain Roy, the chief operating officer of the Canadian division, indicated on the recent earnings conference call, "We are looking to further develop and gain a foothold in Europe. The proposed acquisition of Charlemagne Capital would create the platform we are looking to build from, providing a London-base for our operations. It would also enable us to meet the increased demand we are already seeing for our strategies in Europe."
As of Sept. 30, assets under administration (AUM) climbed to $112.5-billion, up from $88.8-billion during the same period last year. In terms of composition, 49 pe rcent of AUM was institutional, 29-per-cent retail, and 22-per-cent private wealth. In terms of geographical breakdown, 71 per cent of AUM was from Canada with the balance from the U.S.
National Bank of Canada holds a significant stake in the company.
Dividend policy
The company pays shareholders a quarterly dividend of 16 cents per share or 64 cents on a yearly basis. This equates to an annualized yield of 5.2 per cent.
Management is committed to returning capital to shareholders, frequently hiking its dividend. The company has announced two rate hikes in 2016, announced two increases in 2015, two bumps in 2014, and two raises in 2013. Management noted on the third-quarter conference call that the "quarterly dividend declared per participating share has grown by an average of 17.8 per cent per year on a compounded basis since the fourth quarter of 2010."
Valuation
According to Bloomberg, the shares are trading at an enterprise value-to-EBITDA multiple of 9.9 times the 2017 consensus estimate.
Analysts' recommendations
This small cap stock is covered by six analysts, one of whom is currently restricted on the stock. The remaining five analysts all have 'buy' recommendations. The six firms providing research coverage are Canaccord Genuity, Desjardins Securities, GMP, National Bank Financial, Scotia Capital, and TD Securities.
The average one-year target price is $15.20, implying the share price may rise over 22 per cent over the next 12 months. Individual target prices in numerical order are as follows: two at $14.50, two at $15.50, and $16.
The Street is forecasting growth for the company. The consensus revenue estimate is $315.6-million for 2016, rising 20 per cent to $379.6-million in 2017. The consensus EBITDA estimate is $100-million for 2016, increasing to $137-million in 2017. The consensus earnings per share forecast is $1.16 in 2016, rising to $1.24 the following year.
Earnings forecasts have increased since the start of the year. At the beginning of the year, the Street was forecasting revenues of $300-million for 2016 and $334-million for 2017. The consensus EBITDA estimates were $98-million for 2016 and $117-million for 2017.
Chart watch
Over the past three years, since late-2013, the share price has been relatively range-bound, trading principally between $12 and $14, and is currently at the lower end of that range.
Year to date, the share price is up over 9 per cent, underperforming the 16 per cent return for the financial sector in the Index.
The stock has major overhead resistance around $14.
There is initial downside support around $12, minor support around $11, and major support around $10.
The two-month average daily trading volume is respectable at approximately 146,000 shares.
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The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, and provides a brief technical analysis for a security to provide readers with more information.
If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.
Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.