Is Now the Time to Buy Aberdeen Asset Management plc (ADN)?

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LONDON – I’m always searching for shares that can help ordinary investors like you make money from the stock market.

So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I’m hoping to pinpoint the very best buying opportunities in today’s uncertain market.

Today I am looking at Aberdeen Asset Management plc (LON:ADN) to determine whether you should consider buying the shares at 432 pence.

ABERDEEN ASSET MANAGEMENT INC. LOGOI am assessing each company on several ratios:

Price/Earnings (P/E): Does the share look good value when compared against its competitors?

Price Earnings Growth (PEG): Does the share look good value factoring in predicted growth?

Yield: Does the share provide a solid income for investors?

Dividend Cover: Is the dividend sustainable?

So, let’s look at the numbers:

Stock Price 3-Yr. EPS Growth Projected P/E PEG Yield 3-Yr. Dividend Growth Dividend Cover
Aberdeen Asset Management 432p 74% 16 0.8 2.7% 64% 2

The consensus analyst estimate for next year’s earnings per share is 27 pence (19% growth) and dividend per share is 13.7 pence (19% growth).

Trading on a projected P/E of 16, Aberdeen Asset Management plc (LON:ADN) appears to be much cheaper than its peers in the financial services sector, which are currently trading on an average P/E of around 20.2.

Furthermore, Aberdeen Asset Management plc (LON:ADN)’s P/E and high double-digit growth rate give a PEG ratio of around 0.8, which implies that the share is cheap for the near-term earnings growth the firm is expected to produce.

At 2.7%, Aberdeen Asset Management plc (LON:ADN)’s dividend income is below the sector average of 3.5%. However, Aberdeen has a three-year compounded dividend growth rate of 64%, implying that the yield could soon overtake that of its peers.

Indeed, the dividend is approximately two times covered by earnings, giving Aberdeen plenty of room for further payout growth.

Aberdeen’s earnings are forecast to grow rapidly this year; is now the time to buy?
Aberdeen is a global asset management company and fund manager. Indeed, Aberdeen is one of the largest asset management companies in the world with just over 193 billion pounds in assets under management.

As one of the world’s largest asset management companies, Aberdeen seems in prime position to benefit from the record amount of money currently flowing into stock markets around the globe. Indeed, during the last quarter of 2012, the company reported record quarterly inflows of 1.1 billion pounds into its products.

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