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Brookfield Business Partners (TSE:BBU.UN)
:BBU.UN
RESEARCH TOOLSreports
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Brookfield Business Partners
(NYSE:BBU.UN)
61Neutral
Positive Factors
Debt Reduction
An improving backdrop for monetizations and strengthening cash flow profile provide a pathway for BBU to reduce corporate-level debt, which should be supportive for valuation.
Financial Performance
Attractive upside to current financial performance.
Value Creation
Over the next 3-5 years, the value creation plans underway at the portfolio companies are anticipated to increase EBITDA to $2.8B, up ~$500M (>20%) from current levels.
Negative Factors
Market Volatility
Although financial markets are steadily improving, potential volatility could impact the effectiveness of multiple exit strategies, including IPOs and the sale of minority interests.
Brookfield Business Partners (BBU.UN) vs. S&P 500 (SPY)
Market Cap
C$2.91B
Dividend Yield1.08%
Average Volume (3M)47.94K
Price to Earnings (P/E)2.8
Beta (1Y)1.84
Revenue Growth-20.99%
EPS Growth-108.53%
CountryCA
Employees72,000
SectorIndustrials
Sector Strength63
IndustryConglomerates
Share Statistics
EPS (TTM)-0.75
Shares Outstanding90,811,280
10 Day Avg. Volume34,462
30 Day Avg. Volume47,938
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.10
Price to Cash Flow (P/CF)15.80
P/FCF Ratio1.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$46.60Price Target Upside45.52% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Brookfield Business Partners Business Overview & Revenue Model
Company DescriptionBrookfield Business Partners (BBU.UN) is a leading global business services and industrials company, focused on owning and operating high-quality businesses that provide essential products and services. As a flagship listed vehicle of Brookfield Asset Management, it invests in a diverse range of sectors, including business services, infrastructure, industrials, and healthcare. The company is committed to growing its businesses through operational improvements and strategic acquisitions, leveraging its global expertise and access to capital.
How the Company Makes MoneyBrookfield Business Partners generates revenue through the ownership and operation of a diversified portfolio of businesses across various sectors. Its revenue streams include income from business services, fees from infrastructure operations, manufacturing and industrial services, and healthcare services. The company benefits from Brookfield Asset Management's extensive network and capital resources, enabling it to execute strategic acquisitions and enhance the operational performance of its portfolio companies. Additionally, Brookfield Business Partners may engage in partnerships or joint ventures to expand its market presence and optimize revenue generation.
Brookfield Business Partners Financial Statement Overview
Summary
Brookfield Business Partners is facing a challenging financial landscape. While operational efficiency has improved, as seen in better margins, revenue decline and high leverage are major concerns. The company needs to address its high debt levels and improve cash flow stability to ensure long-term financial health.Income Statement
The company's income statement shows mixed performance. Revenue has decreased from the previous year, indicating a negative revenue growth rate. However, the gross profit margin improved to 9.16% from 7.72% in 2022. The net profit margin for 2023 is 0.88%, showing a slight improvement over the previous year's 0.62%. The EBIT margin has improved significantly to 6.37% from a negative margin in 2022, indicating better operational efficiency. The EBITDA margin is robust at 12.90%, suggesting strong earnings before interest, taxes, depreciation, and amortization.65
Positive
Balance Sheet
The balance sheet presents some concerns. The debt-to-equity ratio has increased significantly to 23.84 from 2.75 in 2022, indicating high leverage and potential financial risk. Return on equity has decreased dramatically to 25.25% from 1.92%, showing poor utilization of equity. The equity ratio has dropped to 2.32%, down from 20.63% in 2022, indicating a decline in the proportion of assets funded by shareholders' equity.40
Negative
Cash Flow
Cash flow analysis indicates challenges. The free cash flow for 2023 is negative, but the free cash flow growth rate improved significantly from the previous year's negative figure. The operating cash flow to net income ratio is 4.42, suggesting better cash conversion. However, the free cash flow to net income ratio is negative, highlighting ongoing cash flow issues.50
Neutral
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 51.77B | 55.07B | 57.55B | 46.59B | 37.63B | 43.03B | Gross Profit |
| 4.73B | 5.05B | 4.44B | 3.44B | 5.17B | 4.71B | EBIT |
| -323.00M | 3.51B | -226.00M | -1.24B | 2.03B | 1.95B | EBITDA |
| 1.29B | 7.10B | 5.42B | 1.04B | 4.19B | 3.76B | Net Income Common Stockholders |
| 548.00M | 482.00M | 355.00M | 2.15B | 580.00M | 434.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 382.00M | 3.84B | 2.87B | 2.59B | 2.74B | 1.99B | Total Assets |
| 4.41B | 82.39B | 89.50B | 64.22B | 54.75B | 51.75B | Total Debt |
| 808.00M | 45.52B | 50.78B | 29.08B | 23.78B | 22.40B | Net Debt |
| 645.00M | 42.27B | 47.91B | 26.49B | 21.03B | 20.41B | Total Liabilities |
| 2.27B | 63.85B | 71.03B | 51.22B | 43.41B | 40.70B | Stockholders Equity |
| 1.50B | 1.91B | 18.46B | 13.00B | 11.34B | 11.05B |
| Cash Flow | Free Cash Flow | ||||
| -561.00M | -158.00M | -737.00M | 243.00M | 2.80B | 958.00M | Operating Cash Flow |
| 1.99B | 2.13B | 1.01B | 1.69B | 4.21B | 2.16B | Investing Cash Flow |
| 1.79B | 2.54B | -18.72B | -8.93B | -2.33B | -17.94B | Financing Cash Flow |
| -3.74B | -4.37B | 18.07B | 7.06B | -1.08B | 15.93B |
Brookfield Business Partners Technical Analysis
Negative
32.02
Price Trends
33.47
Negative
33.52
Negative
31.07
Negative
Market Momentum
0.16
Negative
49.40
Neutral
60.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:BBU.UN, the sentiment is Negative. The current price of 32.02 is below the 20-day moving average (MA) of 33.15, below the 50-day MA of 33.47, and above the 200-day MA of 31.07, indicating a bearish trend. The MACD of 0.16 indicates Negative momentum. The RSI at 49.40 is Neutral, neither overbought nor oversold. The STOCH value of 60.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:BBU.UN.
Brookfield Business Partners Risk Analysis
Brookfield Business Partners disclosed 1 risk factors in its most recent earnings report. Brookfield Business Partners reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Brookfield Business Partners Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | C$4.88B | 10.00 | 19.79% | 3.03% | 6.45% | 2.60% | |
76 Outperform | C$31.73B | 24.61 | 21.04% | 1.34% | 2.47% | -7.67% | |
65 Neutral | C$2.54B | 19.43 | 9.13% | 5.54% | 6.46% | -5.54% | |
62 Neutral | $7.26B | 12.38 | 3.01% | 3.40% | 3.58% | -14.13% | |
61 Neutral | C$2.91B | 2.83 | -2.02% | 1.08% | -20.99% | -108.53% | |
55 Neutral | $19.32B | 2,744.44 | 0.96% | 5.95% | 17.33% | -92.62% | |
47 Neutral | $20.99B | ― | -4.87% | 6.98% | 22.01% | -183.73% |
* Industrials Sector Average
Performance Comparison
TSE:BBU.UN
Brookfield Business Partners
29.04
1.52
5.51%
BIP
Brookfield Infrastructure
27.63
-0.15
-0.54%
TSE:BEP.UN
Brookfield Renewable Partners
29.28
-0.09
-0.31%
TSE:WN
George Weston
244.77
68.41
38.79%
TSE:FTT
Finning International
36.25
-4.46
-10.96%
TSE:EIF
Exchange Income
47.67
1.67
3.63%
Brookfield Business Partners Earnings Call Summary
Earnings Call Date: Jan 31, 2025 | % Change Since: 2.89% | Next Earnings Date: May 2, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive sentiment overall with significant achievements such as record EBITDA, strategic capital recycling, and successful debt financing at Clarios. However, there are notable challenges including a net loss primarily due to impairments and underperformance in certain segments.Highlights
Record Full Year Adjusted EBITDA
Achieved a record full year adjusted EBITDA of $2.6 billion, with margins increasing to over 20%.
Strong Capital Recycling Initiatives
Generated more than $2 billion from capital recycling initiatives, including $1 billion from monetizations and distributions.
Successful Debt Raise at Clarios
Completed an oversubscribed debt raise at Clarios, funding a $4.5 billion distribution with BBU's share being $1.2 billion, representing a 1.5x multiple of the investment.
New $250 Million Share Buyback Program
Announced a $250 million share buyback program, aimed at being accretive to the per unit value of BBU.
Acquisition of Chemelex
Completed the acquisition of Chemelex, with BBU's share of the equity investment at approximately $210 million.
Strong Performance of Clarios
Clarios maintains a strong trajectory with increasing earnings and cash flows, and holds a leading market position globally.
Lowlights
Net Loss for the Year
Generated a net loss of $109 million in 2024, primarily due to impairments in healthcare services and natural gas producer.
Challenges at Healthscope
Healthscope faces ongoing challenges with a mismatch between revenue growth and cost escalation.
Decreased EBITDA in Business Services Segment
Business Services segment generated $832 million, down from $900 million in 2023.
Decline in Infrastructure Services Segment
Infrastructure Services segment generated $606 million, down from $853 million in 2023.
Company Guidance
During the Brookfield Business Partners Fourth Quarter 2024 Results Conference Call, guidance was provided on several key metrics and strategic initiatives. The company reported a record full-year adjusted EBITDA of $2.6 billion, with margins increasing to over 20%. Over the past year, capital recycling initiatives generated more than $2 billion, including about $1 billion from monetizations and distributions funded by ongoing operations. A $4.5 billion distribution was funded through an upfinancing at Clarios, with Brookfield Business Partners' share equating to a 1.5 times multiple of their investment. The company announced a new $250 million share buyback program, aiming to be active in regular market buybacks and block repurchases. Additionally, they completed a $210 million equity investment in Chemelex, focusing on optimizing operations and leveraging the Brookfield platform for growth. The company remains confident in the resilience of its businesses and continues to target strong cash flow returns through strategic investments and operational improvements.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.