IGM FINANCIAL INC. $46 - Toronto symbol IGM

IGM FINANCIAL INC. $46 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 255.1 million; Market cap: $11.7 billion; Price-to-sales ratio: 3.7; Dividend yield: 4.7%; TSINetwork Rating: Above Average; www. igmfinancial.com) is Canada’s largest independent mutual fund company. Power Financial owns 58.7% of IGM.

As of June 30, 2013, the company had $124.8 billion of assets under management, including mutual funds. That’s down 1.8% from $127.1 billion on May 31, 2013. Recent volatility in world stock markets is the main reason for the decline. However, IGM’s assets under administration are still up 5.8% from a year earlier.

IGM’s fee income rises and falls with the value of the securities it manages, so its revenue and earnings gain when the value of these assets rises.

To help spur sales and compete with other fund companies, IGM has lowered the management fees on most of the mutual funds it sells through its Investors Group subsidiary. Even with these cuts, IGM’s earnings should rise to $3.11 a share in 2013 from $2.94 in 2012. The stock trades at 14.8 times that forecast. The $2.15 dividend yields 4.7%.

IGM Financial is a buy.

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