IGM Financial (IGM) AI Stock Analysis

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IGM Financial

(TSX:IGM)

71Outperform

IGM Financial scores a 71, reflecting solid financial performance with particular strengths in liquidity and cash flow management. Earnings call highlights positive growth in assets and earnings, while technical indicators and valuation suggest a stable outlook. The company faces challenges in profitability and market volatility, which need addressing for sustained growth.

Positive Factors

Institutional Wins

The company achieved a significant institutional win with a $4 billion Q1/25 sub-advisory contract.

Net Inflows

IGM reported $243mm Q4/24 net inflows, which were better than the estimated $100mm net inflow.

Share Buybacks

Elevated share buybacks are consistent with management's strategic plan to reduce share count.

Negative Factors

Earnings Pressure

China AMC's earnings are weaker than expected due to fee margin compression in a competitive market.

Market Conditions

Uncertain market conditions result in a Market Perform rating being maintained.

Valuation Concerns

The company's valuation is higher than its historical average, which may be a concern for investors considering the stock.

IGM Financial (IGM) vs. S&P 500 (SPY)

Market Cap

$10.06B

Dividend Yield5.37%

Average Volume (3M)384.19K

Price to Earnings (P/E)10.8

Beta (1Y)1.10

Revenue Growth-9.41%

EPS Growth-18.55%

CountryCA

Employees3,827

SectorFinancial

Sector Strength79

IndustryAsset Management

Share Statistics

EPS (TTM)3.93

Shares Outstanding236,813,460

10 Day Avg. Volume369,494

30 Day Avg. Volume384,189

Financial Highlights & Ratios

PEG Ratio0.65

Price to Book (P/B)N/A

Price to Sales (P/S)3.06

Price to Cash Flow (P/CF)7.30

P/FCF Ratio7.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$52.30

Price Target Upside29.54% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering4

IGM Financial Business Overview & Revenue Model

Company DescriptionIGM Financial Inc. is a leading diversified wealth and asset management company based in Canada. It operates through its principal subsidiaries, IG Wealth Management, Mackenzie Investments, and Investment Planning Counsel. The company offers a comprehensive range of financial planning services, investment management, mutual funds, and financial advisory services aimed at helping clients achieve their financial goals. IGM Financial is committed to providing personalized financial solutions and asset management expertise to individuals, families, and institutions.

How the Company Makes MoneyIGM Financial makes money primarily through the management fees and advisory fees charged on assets under management (AUM). These fees are typically a percentage of the total assets managed and vary depending on the type of investment product or service offered. The company also earns revenue through commissions on the sale of investment products and financial planning services. Additionally, IGM Financial benefits from economies of scale and operational efficiencies, which enhance its profitability. Key partnerships with financial advisors and institutions, as well as a diverse product offering, contribute significantly to its earnings by expanding its reach and client base.

IGM Financial Financial Statement Overview

Summary

IGM Financial demonstrates strong liquidity and cash flow management, with healthy EBITDA margins and improving free cash flow. However, there are concerns regarding declining revenue and net income, along with a potential risk due to significant liabilities. The company needs to address profitability issues to sustain long-term growth.

Income Statement

Positive

IGM Financial shows consistent revenue generation but a decline from 2023 to 2024. The Gross Profit Margin for 2024 is 48.7%, indicating effective cost management. However, the absence of EBIT and a lower Net Profit Margin of 26.7% in 2024 compared to 31% in 2023 signals weakening profitability. Despite this, EBITDA Margin remains strong at 41%.

Balance Sheet

Positive

The company's Debt-to-Equity Ratio stands at 0.97, reflecting a balanced approach to leveraging. Return on Equity is 11.96%, indicating moderate efficiency in using equity. The Equity Ratio is 37.7%, showing a stable capital structure, but the relatively high total liabilities suggest potential risks if revenue trends continue to decline.

Cash Flow

Positive

Free Cash Flow grew by 51.3% from 2023 to 2024, indicating strong cash generation ability. The Operating Cash Flow to Net Income Ratio is 1.23, suggesting efficient conversion of earnings into cash. The Free Cash Flow to Net Income Ratio is 1.11, demonstrating strong liquidity and financial flexibility.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.49B	3.70B	3.46B	3.59B	3.15B
	Gross Profit
1.70B	1.43B	1.61B	3.25B	2.87B
	EBIT
0.00	1.41B	1.24B	1.38B	1.08B
	EBITDA
1.43B	1.36B	1.20B	1.48B	1.16B
	Net Income Common Stockholders
933.51M	1.15B	867.24M	978.95M	764.41M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.26B	686.85M	1.68B	2.58B	1.36B
	Total Assets
20.68B	18.66B	18.87B	17.66B	16.06B
	Total Debt
7.59B	7.26B	6.90B	7.36B	8.46B
	Net Debt
6.68B	6.71B	5.83B	6.06B	7.69B
	Total Liabilities
12.81B	11.94B	12.61B	11.16B	11.02B
	Stockholders Equity
7.80B	6.66B	6.20B	6.45B	4.99B
Cash Flow		Free Cash Flow
1.03B	683.50M	592.89M	857.67M	628.83M
	Operating Cash Flow
1.15B	837.28M	737.67M	943.59M	736.63M
	Investing Cash Flow
-473.77M	-1.16B	134.71M	1.10B	673.38M
	Financing Cash Flow
-313.42M	-203.77M	-1.09B	-1.52B	-1.36B

IGM Financial Technical Analysis

Technical Analysis Sentiment

Negative

Last Price40.37

Price Trends

50DMA

43.83

Negative

100DMA

44.58

Negative

200DMA

41.55

Negative

Market Momentum

MACD

0.04

Negative

RSI

51.11

Neutral

STOCH

26.49

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:IGM, the sentiment is Negative. The current price of 40.37 is below the 20-day moving average (MA) of 43.30, below the 50-day MA of 43.83, and below the 200-day MA of 41.55, indicating a bearish trend. The MACD of 0.04 indicates Negative momentum. The RSI at 51.11 is Neutral, neither overbought nor oversold. The STOCH value of 26.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:IGM.

IGM Financial Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SLF	75 Outperform	$44.97B	14.91	12.87%	4.26%	-12.72%	-0.16%
MFC	75 Outperform	$70.82B	14.41	11.03%	4.04%	7.64%	9.22%
GWO	73 Outperform	C$48.77B	12.54	15.52%	4.34%	-2.40%	42.24%
IGM	71 Outperform	$10.06B	10.80	13.00%	5.37%	-9.41%	-18.55%
Sector *	64 Neutral	$13.46B	9.44	9.34%	4.72%	16.14%	-8.80%
FSZ	59 Neutral	C$664.87M	26.35	8.22%	14.73%	5.64%	-57.76%
CIX	51 Neutral	$4.49B	―	-55.59%	2.65%	3.21%	-9107.07%

* Financial Sector Average

Performance Comparison

TSE:IGM

IGM Financial

40.37

8.33

26.00%

TSE:SLF

Sun Life Financial

75.94

8.71

12.95%

TSE:MFC

Manulife Financial

38.95

8.31

27.10%

TSE:CIX

CI Financial

31.12

15.11

94.33%

TSE:FSZ

Fiera Capital A

5.85

-1.00

-14.60%

TSE:GWO

Great-West Lifeco

51.53

13.08

34.02%

IGM Financial Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: -8.44% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Positive

The earnings call reflects a positive overall performance with significant asset growth, high adjusted EPS, and strategic expansions in Wealthsimple, Rockefeller, and Northleaf. Despite some challenges, particularly with Mackenzie's net redemptions and China AMC's fee reductions, the company's strong financial health and asset growth contribute to a positive sentiment.

Highlights

Strong Financial Performance

Adjusted EPS of $3.95, up 12% year-over-year, and $1.05 in Q4, up 22% year-over-year. This marks the second highest year on record for EPS.

Asset Growth

Client assets grew by 24%, reaching over $480 billion. Record high AUM&A and strong inflows in IG Wealth and Mackenzie segments.

Recognition and Awards

IGM Financial was recognized as a top sustainable company and one of Canada's top employers.

Wealthsimple Growth

Wealthsimple AUA increased by 106% year-over-year, setting a new quarterly record with $11.9 billion in growth.

Rockefeller and Northleaf Expansion

Rockefeller added 54 new advisers and saw a 24% increase in client assets. Northleaf secured $4.9 billion in new commitments, expanding its global distribution.

Lowlights

Mackenzie Net Redemptions

Mackenzie Investment fund net redemptions of $377 million in Q4, although an improvement from the previous year.

China AMC Fee Reductions Impact

China AMC made significant fee reductions on ETFs impacting earnings, with expectations of flat earnings in 2025 compared to 2024.

Volatility Concerns

Potential financial impact and market volatility due to geopolitical issues such as tariffs between the U.S., Canada, and Mexico.

Company Guidance

In the fourth quarter of 2024, IGM Financial demonstrated strong financial performance with adjusted EPS of $1.05, marking a 22% increase compared to the previous year, making it the second-best fourth quarter on record. The company returned over $650 million of capital to shareholders throughout the year, including $180 million in the fourth quarter alone through dividends and share repurchases. IGM's client assets grew significantly, reaching over $480 billion by year-end, driven by a 24% increase in client assets, with core businesses IG Wealth and Mackenzie Investments accounting for a large portion of this growth. The financial markets were strong, contributing to a 15.5% average client return for IG and Mackenzie. Looking ahead to 2025, IGM plans to continue investing in its wealth and asset management segments, leveraging its adviser platform, and maintaining its strong dividend and share repurchase program.

IGM Financial Corporate Events

Financial Disclosures

IGM Financial Reports Strong Asset Management Growth in 2024

Positive

Feb 6, 2025

IGM Financial Inc. reported its fourth quarter and full-year 2024 earnings, showcasing a significant increase in adjusted net earnings and assets under management compared to the previous year. Despite a decrease in net earnings due to the absence of a prior year’s gain from an asset sale, the company achieved record-high assets under management of $270.4 billion, reflecting strong momentum in its wealth management segment. This growth contributed to a notable rise in adjusted earnings per share, marking one of the strongest annual performances in the company’s history.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.