Brookfield Business Partners (BBU.UN) AI Stock Analysis

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Brookfield Business Partners

(NYSE:BBU.UN)

Rating:67Neutral

Price Target:

C$37.00

▲(8.66%Upside)

Brookfield Business Partners is rated moderately due to strong operational efficiency and positive market momentum. However, high financial leverage and a negative P/E ratio weigh on the score. The recent earnings call provided a positive outlook despite some segment challenges, contributing positively to the overall assessment.

Positive Factors

Debt Management

Financial leverage has shifted materially lower, with additional improvement expected as monetizations materialize.

Earnings

Two of BBU’s largest EBITDA contributors, Clarios and Sagen, continue to shine.

Investment Opportunities

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

Debt Concerns

Healthscope results beat expectations, but its performance continues to be under pressure with an unsustainable elevated debt structure.

Brookfield Business Partners (BBU.UN) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$3.07B

Dividend Yield1%

Average Volume (3M)54.12K

Price to Earnings (P/E)2.8

Beta (1Y)1.93

Revenue Growth-27.79%

EPS Growth-106.03%

CountryCA

Employees72,000

SectorIndustrials

Sector Strength90

IndustryConglomerates

Share Statistics

EPS (TTM)0.52

Shares Outstanding89,376,396

10 Day Avg. Volume27,003

30 Day Avg. Volume54,123

Financial Highlights & Ratios

PEG Ratio-0.08

Price to Book (P/B)0.14

Price to Sales (P/S)0.00

P/FCF Ratio-3.39

Enterprise Value/Market Cap16.43

Enterprise Value/Revenue0.26

Enterprise Value/Gross Profit8.79

Enterprise Value/Ebitda2.04

Forecast

1Y Price Target

C$42.48

Price Target Upside24.76% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering6

Brookfield Business Partners Business Overview & Revenue Model

Company DescriptionBrookfield Business Partners (BBU.UN) is a leading global business services and industrials company. It operates through a diverse portfolio of businesses, including construction, energy, industrials, and services sectors. The company focuses on acquiring and managing quality businesses that provide essential products and services, leveraging its operational expertise to enhance their performance and profitability.

How the Company Makes MoneyBrookfield Business Partners makes money primarily through acquiring and managing a diverse array of businesses across various industries. The company generates revenue from its operations in sectors such as construction, energy, and industrials by improving the efficiency and profitability of the businesses it acquires. Additionally, BBU.UN benefits from its strategic partnerships and investment opportunities, which contribute to its earnings. The company’s revenue streams are diversified across its portfolio, reducing dependence on any single business or sector, and it often seeks to create value through operational improvements, strategic repositioning, and financial restructuring of the businesses it owns.

Brookfield Business Partners Earnings Call Summary

Earnings Call Date:May 02, 2025

(Q1-2025)

% Change Since: 14.32%|

Next Earnings Date:Aug 01, 2025

Earnings Call Sentiment Neutral

The earnings call highlights several positive achievements, such as strong capital recycling, significant unit buyback, and positive EBITDA growth. However, there are challenges in specific segments like Infrastructure Services and Engineered Components, alongside concerns over tariffs and trade policies. Despite these issues, the proactive measures and strategic investments position the company well for future growth.

Q1-2025 Updates

Positive Updates

Strong Capital Recycling and New Acquisitions

Generated over $1.5 billion from capital recycling initiatives and committed $370 million to acquire two market-leading industrial businesses.

Significant Unit Buyback

Reduced corporate borrowings and bought back nearly six million units and shares, returning $140 million to shareholders as part of a $250 million repurchase program.

Positive EBITDA Growth

First quarter adjusted EBITDA was $591 million, an increase from $544 million in the prior period.

Successful Strategic Investments

Reached an agreement to acquire Antylia Scientific, a leading manufacturer in life sciences and environmental labs, with opportunities for growth and improvement.

Strong Industrial Segment Performance

Industrial segment generated first quarter adjusted EBITDA of $304 million, aided by tax benefits and demand for higher-margin advanced batteries.

Negative Updates

Challenges in Engineered Components Sector

End market weakness and lower volumes impacted the engineered components manufacturer, necessitating active cost management to support margins.

Softness in Infrastructure Services Segment

First quarter adjusted EBITDA in Infrastructure Services decreased from $143 million to $104 million, affected by weak market conditions in work access services.

Tariff and Trade Policy Concerns

Uncertainty around tariffs and trade policies poses risks, particularly for DexKo and Clarios, although impacts are expected to be manageable.

CDK Global Churn

Higher churn in CDK's single product customers, though core customers appear more stable, impacting year-over-year performance.

Company Guidance

During the first quarter of 2025, Brookfield Business Partners reported significant progress in several areas, as highlighted in their recent conference call. The company generated over $1.5 billion from capital recycling initiatives and allocated $370 million to acquire two leading industrial businesses. They also reduced corporate borrowings and bought back nearly six million units and shares, spending $140 million as part of a $250 million repurchase program. The company's adjusted EBITDA for the quarter was $591 million, up from $544 million in the previous period, while adjusted EFO stood at $345 million. Segment performance was notable, with the Industrial segment contributing $304 million in adjusted EBITDA and the Business Service segment generating $213 million. The Infrastructure Services segment, however, saw a decrease to $104 million from $143 million the previous year. Brookfield continues to focus on enhancing operational capabilities, preparing for potential economic uncertainties, and leveraging growth opportunities in regions like the U.S., Europe, India, and the Middle East.

Brookfield Business Partners Financial Statement Overview

Summary

Brookfield Business Partners shows operational improvements with rising EBIT and EBITDA margins. However, high leverage and minimal equity pose significant financial risks. Despite these concerns, robust cash flows provide some cushion.

Income Statement

Positive

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.

Balance Sheet

Neutral

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.

Cash Flow

Positive

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
40.62B	53.05B	57.55B	46.59B	37.63B
	Gross Profit
5.74B	2.12B	4.44B	3.44B	5.17B
	EBIT
4.47B	549.90M	-226.00M	-1.24B	2.03B
	EBITDA
7.70B	6.29B	5.42B	1.04B	4.19B
	Net Income Common Stockholders
15.00M	482.00M	355.00M	2.15B	580.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.03B	3.84B	2.87B	2.59B	2.74B
	Total Assets
75.47B	82.39B	89.50B	64.22B	54.75B
	Total Debt
39.79B	45.52B	50.78B	29.08B	23.78B
	Net Debt
36.55B	42.27B	47.91B	26.49B	21.03B
	Total Liabilities
58.17B	63.85B	71.03B	51.22B	43.41B
	Stockholders Equity
1.75B	1.90B	64.92B	60.82B	52.28B
Cash Flow		Free Cash Flow
761.00M	-158.00M	-737.00M	243.00M	2.80B
	Operating Cash Flow
3.28B	2.13B	1.01B	1.69B	4.21B
	Investing Cash Flow
-2.33B	2.54B	-18.72B	-8.93B	-2.33B
	Financing Cash Flow
-505.00M	-4.37B	18.07B	7.06B	-1.08B

Brookfield Business Partners Technical Analysis

Technical Analysis Sentiment

Positive

Last Price34.05

Price Trends

50DMA

31.88

Positive

100DMA

32.60

Positive

200DMA

32.27

Positive

Market Momentum

MACD

0.51

Positive

RSI

53.53

Neutral

STOCH

29.76

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 34.05 is below the 20-day moving average (MA) of 34.40, above the 50-day MA of 31.88, and above the 200-day MA of 32.27, indicating a neutral trend. The MACD of 0.51 indicates Positive momentum. The RSI at 53.53 is Neutral, neither overbought nor oversold. The STOCH value of 29.76 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 (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BDT	81 Outperform	C$1.52B	15.17	26.31%	3.05%	16.14%	27.71%
MDA	80 Outperform	C$3.54B	36.30	8.54%	―	49.98%	108.76%
SES	76 Outperform	C$3.49B	19.14	16.22%	2.54%	13.51%	-58.43%
BDGI	74 Outperform	$1.56B	23.37	19.89%	1.57%	10.97%	24.27%
EIF	70 Outperform	C$2.97B	22.35	9.16%	4.57%	5.95%	-1.42%
BBU.UN	67 Neutral	C$3.07B	2.83	-1.19%	1.00%	-27.79%	-106.03%
Sector *	66 Neutral	$4.52B	12.34	5.41%	3.62%	4.15%	-12.18%

* Industrials Sector Average

Performance Comparison

TSE:BBU.UN

Brookfield Business Partners

34.00

7.29

27.30%

TSE:BDGI

Badger Infrastructure Solutions

45.69

6.00

15.13%

TSE:BDT

Bird Construction

27.93

3.30

13.40%

TSE:EIF

Exchange Income

58.05

16.33

39.14%

TSE:SES

Secure Energy Services

15.55

4.00

34.63%

TSE:MDA

MDA Ltd

29.51

17.71

150.08%

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.