Stock Analysis 8: ARA Asset Management

Market Price (2015-3-15) = $1.56

*Based on full year 2014 earnings.

Earnings
Approx. EPS: $0.1035
Approx. DPS: $0.05

Ratios

P/E: 15.07
Yield: 3.2%

Profitability

ROE: 28.87% [Avg for SG blue chips is 11.8%]
Asset Turnover: 0.16178 [Avg for SG blue chips is ~0.5]
Net Income Margin:51.189

Operating Cash Flow ($101M) - Capex ($1.2M) = $101M Free Cash Flow!

Balance Sheet

Current Ratio: 1.88
Debt To Equity: 0.099
NAV: $0.4024

Additional Info

Biannual distributions in Aug/Dec. Management committed to $0.5 dividends every year. (They have done this for the past 3 years)

Personal Opinion:

This stock is in the business of asset management. They manage REITs and private funds. It has been on a downtrend for sometime, despite good earnings.

+ Amazing ROE and net income margin.
+ Proven track records, with steady dividends since 2008.
+ Bulk of revenue (management fees) are recurrent in nature and provide stable base.
+ Relatively solid balance sheet with $64M in cash and $34M borrowings.
+ At its 52 week low...

- Rising interest rates might cause the downtrend to continue.

Not at its current valuation... If the P/E drops to around 14 (in line with STI)...