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Brookfield Business Partners LP (TSE:BBU.UN)
TSX:BBU.UN
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Brookfield Business Partners
(TSX:BBU.UN)
Rating:63Neutral
Price Target:
C$37.00
▲(6.23% Upside)
Positive Factors
EBITDA Contributors
Two of BBU’s largest EBITDA contributors, Clarios and Sagen, continue to shine.
Insurance Premium Increase
Sagen performance remains strong with a transactional insurance premium increase driven by a higher insured mortgage cap and expanding eligibility.
Private Equity Exposure
BBU offers a unique way to gain private equity exposure without liquidity constraints, supported by a solid investment return track record and attractive valuation.
Negative Factors
Financial Leverage
Financial leverage has shifted materially lower, with additional improvement expected as monetizations materialize.
Healthscope Debt Structure
Healthscope results beat expectations, but its performance continues to be under pressure with an unsustainable elevated debt structure.
Portfolio Value Perception
The portfolio value remains underappreciated and the potential return to investors is significant.
Brookfield Business Partners (BBU.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$3.11B
Dividend Yield1%
Average Volume (3M)24.06K
Price to Earnings (P/E)2.8
Beta (1Y)2.06
Revenue Growth-36.55%
EPS Growth-102.52%
CountryCA
Employees72,000
SectorIndustrials
Sector Strength76
IndustryConglomerates
Share Statistics
EPS (TTM)0.17
Shares Outstanding89,376,396
10 Day Avg. Volume29,068
30 Day Avg. Volume24,060
Financial Highlights & Ratios
PEG Ratio-1.08
Price to Book (P/B)0.99
Price to Sales (P/S)0.04
P/FCF Ratio2.29
Enterprise Value/Market Cap24.37
Enterprise Value/Revenue2.15
Enterprise Value/Gross Profit12.76
Enterprise Value/Ebitda12.04
Forecast
1Y Price Target
$45.50Price Target Upside30.63% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Brookfield Business Partners Business Overview & Revenue Model
Company DescriptionBrookfield Business Partners (BBU.UN) is a leading global alternative asset manager focused on acquiring and operating high-quality businesses across various sectors, including industrials, infrastructure services, and renewable energy. The company leverages its extensive operational expertise and capital resources to enhance the performance of its portfolio companies, driving long-term value creation. With a diversified investment approach, Brookfield Business Partners aims to generate attractive risk-adjusted returns for its investors by focusing on stable cash flows and growth opportunities in its core sectors.
How the Company Makes MoneyBrookfield Business Partners generates revenue primarily through management fees and performance fees associated with its investment management activities. The company earns management fees as a percentage of the capital it manages, which is derived from its investments in various businesses. Performance fees, also known as incentive fees, are earned based on the profitability and performance of its portfolio companies, aligning the interests of Brookfield with those of its investors. Additionally, BBU.UN may benefit from dividends and capital appreciation from its investments, which contribute to its overall earnings. Significant partnerships with other Brookfield entities and institutional investors further enhance its capital-raising capabilities and access to a broader range of investment opportunities, thereby supporting its revenue generation.
Brookfield Business Partners Earnings Call Summary
Earnings Call Date:Aug 07, 2025
(Q2-2025)
| % Change Since: 0.84%|
Next Earnings Date:Oct 31, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong financial performance with increased EBITDA and strategic asset transactions, alongside some operational challenges and global economic uncertainties. Despite setbacks in certain segments, the company made significant strategic acquisitions and successfully executed secondary market transactions, indicating a proactive approach to managing and growing its business.Q2-2025 Updates
Positive Updates
Strong Financial Results
Adjusted EBITDA increased to $591 million from $524 million in the prior period, supported by resilient margins and improved performance of existing operations.
Successful Asset Transactions
Realized over $800 million from asset sales and distributions and invested $300 million in acquiring two market-leading businesses.
Strategic Acquisitions
Agreed to privatize First National Financial Corporation with a $145 million equity investment, enhancing its strong cash flows and service model.
Operational Improvements
Increased margins at DexKo by approximately 200 basis points and at Clarios, margins exceeded 20% supported by improved service levels and operational effectiveness.
Secondary Market Transactions
Sold portions of interests in three businesses to seed a new evergreen fund, with units having a redemption value of $690 million, representing an 8.6% discount to NAV.
Negative Updates
Global Economic Uncertainty
Tariffs, rising trade tensions, and geopolitical conflicts have introduced more uncertainty, affecting growth expectations in developed markets.
Challenges in BrandSafway
Lower expected volumes in the rental business, with some demand challenges and volume softness expected to continue through the second half of the year.
Scientific Games Performance
Flat EBITDA performance adjusted for lower hardware deliveries and a performance penalty at one of its JVs, lagging original growth expectations.
Infrastructure Services Segment Decline
Second quarter adjusted EBITDA decreased to $109 million from $157 million in the prior year, impacted by the sale of the offshore oil services shuttle tanker operation.
Company Guidance
During the call, Brookfield Business Partners provided guidance on several key metrics and strategic initiatives. The company reported a strong financial performance for the second quarter of 2025, with adjusted EBITDA rising to $591 million, an increase from the previous period's $524 million. This growth was attributed to resilient margins, improved operational performance, and contributions from recent acquisitions. Over the past six months, Brookfield has realized over $800 million from asset sales and distributions and invested $300 million to acquire two market-leading businesses. Additionally, the company has returned nearly $160 million to owners through a buyback program and expects to repurchase up to 8 million additional units over the next 12 months. Brookfield also engaged in a secondary transaction, selling portions of its interest in three businesses to a new evergreen fund for units with an initial redemption value of $690 million, representing an 8.6% discount to net asset value. The proceeds from these activities will provide flexibility to enhance shareholder value through buybacks, reinvestment in growth, and debt reduction.Brookfield Business Partners Financial Statement Overview
Summary
Brookfield Business Partners shows operational improvements with rising EBIT and EBITDA margins. However, the high leverage and minimal equity present significant financial risks. Strong cash flows provide some cushion, but leverage needs addressing to improve financial stability.Income Statement
The income statement shows a mixed performance. The gross profit margin has been relatively stable, but the net profit margin has been volatile due to fluctuating net income figures. Revenue growth was negative in recent years, indicating a slowdown. However, EBIT and EBITDA margins have improved, suggesting better operational efficiency.70
Positive
Balance Sheet
The balance sheet reflects high leverage, with a debt-to-equity ratio that has been increasing over the years, especially concerning given the low or negative stockholders' equity in recent periods. This signals potential financial risk. Return on equity is not applicable due to negative equity, and the equity ratio indicates minimal equity backing the assets.55
Neutral
Cash Flow
Cash flow statements indicate strong operating cash flow relative to net income, showcasing efficient cash generation capabilities. Free cash flow has shown improvement, although growth has been inconsistent, highlighting potential volatility in cash availability for expansion or debt reduction.75
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 35.35B | 40.62B | 53.05B | 57.55B | 46.59B | 37.63B |
| Gross Profit | 5.95B | 5.74B | 2.12B | 4.44B | 3.44B | 5.17B |
| EBITDA | 6.30B | 7.70B | 6.29B | 5.42B | 1.04B | 4.19B |
| Net Income | 28.00M | 15.00M | 482.00M | 355.00M | 2.15B | 580.00M |
Balance Sheet | ||||||
| Total Assets | 75.89B | 75.47B | 82.39B | 89.50B | 64.22B | 54.75B |
| Cash, Cash Equivalents and Short-Term Investments | 4.27B | 4.03B | 3.84B | 2.87B | 2.59B | 2.74B |
| Total Debt | 45.60B | 39.79B | 45.52B | 50.78B | 29.08B | 23.78B |
| Total Liabilities | 61.03B | 58.17B | 63.85B | 71.03B | 51.22B | 43.41B |
| Stockholders Equity | 2.16B | 1.75B | 1.90B | 64.92B | 60.82B | 52.28B |
Cash Flow | ||||||
| Free Cash Flow | 1.35B | 761.00M | -158.00M | -737.00M | 243.00M | 2.80B |
| Operating Cash Flow | 3.75B | 3.28B | 2.13B | 1.01B | 1.69B | 4.21B |
| Investing Cash Flow | -3.20B | -2.33B | 2.54B | -18.72B | -8.93B | -2.33B |
| Financing Cash Flow | 51.00M | -505.00M | -4.37B | 18.07B | 7.06B | -1.08B |
Brookfield Business Partners Technical Analysis
Positive
34.83
Price Trends
34.75
Positive
33.32
Positive
33.33
Positive
Market Momentum
-0.16
Negative
52.92
Neutral
63.10
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:BBU.UN, the sentiment is Positive. The current price of 34.83 is above the 20-day moving average (MA) of 34.43, above the 50-day MA of 34.75, and above the 200-day MA of 33.33, indicating a bullish trend. The MACD of -0.16 indicates Negative momentum. The RSI at 52.92 is Neutral, neither overbought nor oversold. The STOCH value of 63.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | C$1.80B | 23.60 | 21.65% | 1.38% | 11.48% | 38.41% | |
78 Outperform | C$5.63B | 47.86 | 9.64% | ― | 57.21% | 136.79% | |
73 Outperform | C$1.36B | 13.75 | 25.25% | 3.14% | 8.49% | 14.10% | |
71 Outperform | C$3.76B | 27.23 | 9.71% | 3.73% | 6.87% | 8.42% | |
63 Neutral | $3.11B | 2.83 | -0.29% | 1.00% | -36.55% | -102.52% | |
61 Neutral | C$7.16B | 0.03 | -4.20% | 2.33% | 9.17% | -34.08% | |
55 Neutral | C$3.57B | 19.38 | 21.26% | 2.46% | 3.90% | -57.75% |
* Industrials Sector Average
Performance Comparison
TSE:BBU.UN
Brookfield Business Partners
34.83
7.92
29.45%
TSE:BDGI
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53.38
17.02
46.79%
TSE:BDT
Bird Construction
24.51
0.80
3.37%
TSE:EIF
Exchange Income
72.87
26.31
56.51%
TSE:SES
SECURE Waste Infrastructure
16.26
4.73
41.02%
TSE:MDA
MDA Ltd
45.09
30.28
204.46%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.