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Brookfield Business Partners LP (TSE:BBU.UN)
TSX:BBU.UN
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Brookfield Business Partners
(TSX:BBU.UN)
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Rating:57Neutral
Price Target:
C$46.00
▲(2.61% Upside)
Brookfield Business Partners' overall score is driven by strong earnings call performance and positive technical indicators. However, financial performance concerns, including high leverage and low profitability, and valuation challenges weigh heavily on the score.
Positive Factors
Strong Cash Flow Growth
Strong free cash flow growth indicates robust cash generation capability, providing the company with flexibility for reinvestment and debt reduction.
Strategic Asset Management
Effective asset management and strategic acquisitions enhance portfolio quality and potential growth, supporting long-term value creation.
Growth Through AI and Operational Improvements
AI-driven initiatives enhance operational efficiency, reducing costs and improving competitiveness, which supports sustainable growth.
Negative Factors
High Leverage
High leverage can increase financial risk and limit flexibility, potentially impacting the company's ability to invest in growth opportunities.
Declining Revenue
Declining revenue can indicate challenges in market demand or competitive positioning, potentially affecting long-term profitability and growth.
Low Profitability
Low profitability limits the company's ability to reinvest in its business and may affect its capacity to withstand economic downturns.
Brookfield Business Partners (BBU.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$3.98B
Dividend Yield0.78%
Average Volume (3M)35.84K
Price to Earnings (P/E)2.8
Beta (1Y)2.18
Revenue Growth-36.55%
EPS Growth-102.52%
CountryCA
Employees72,000
SectorIndustrials
Sector Strength72
IndustryConglomerates
Share Statistics
EPS (TTM)0.17
Shares Outstanding88,828,514
10 Day Avg. Volume53,735
30 Day Avg. Volume35,842
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 Cap19.05
Enterprise Value/Revenue2.51
Enterprise Value/Gross Profit12.28
Enterprise Value/Ebitda11.81
Forecast
1Y Price Target
$51.59Price Target Upside15.07% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Brookfield Business Partners Business Overview & Revenue Model
Company DescriptionBrookfield Business Partners L.P. is a private equity firm specializes in acquisition. The firm typically invests in business services, construction, energy, and industrials sector. It prefers to take majority stake in companies. The firm seeks returns of at least 15% on its investments. Brookfield Business Partners L.P. is based in Hamilton, Bermuda. Brookfield Business Partners L.P. operates as a subsidiary of Brookfield Asset Management Inc.
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: |
Next Earnings Date:Oct 31, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, strategic asset management, successful secondary transactions, and growth initiatives through AI and operational improvements. However, challenges such as segment performance declines and market uncertainties were noted. Overall, the highlights significantly outweigh the lowlights.Q2-2025 Updates
Positive Updates
Strong Financial Performance
Adjusted EBITDA increased to $591 million from $524 million in the prior period, indicating strong financial results supported by resilient margins and improved performance of existing operations.
Significant Asset Sales and Investments
Realized more than $800 million from asset sales and distributions and invested $300 million to acquire 2 market-leading businesses, showcasing strategic asset management.
Successful Secondary Sale Transaction
Sold a portion of interest in 3 businesses to a new evergreen fund, receiving units with a redemption value of $690 million at an 8.6% discount to NAV, proving accretive to market value.
Positive Capital Allocation
Continued buyback program, returning nearly $160 million to owners, and planning for further buybacks, indicating efficient capital management.
Growth Through AI and Operational Improvements
Implemented numerous AI-driven initiatives across portfolio companies like Clarios and Everise, resulting in significant cost savings and operational efficiencies.
Negative Updates
Challenges in Business Services Segment
The Infrastructure Services segment saw adjusted EBITDA fall to $109 million from $157 million due to the sale of the shuttle tanker operation and lower hardware deliveries.
Scientific Games Performance Concerns
Despite industry resilience, Scientific Games faced challenges with hardware deliveries and lower jackpots, affecting earnings power and performance relative to expectations.
Market Environment Uncertainty
Global trade tensions and geopolitical conflicts introduced uncertainty, impacting growth expectations despite positive economic indicators like low unemployment.
Company Guidance
During the Brookfield Business Partners (BBU) Second Quarter 2025 Results Conference Call, several key metrics and updates were provided that highlight the company's strategic and financial performance. BBU's adjusted EBITDA rose to $591 million, up from $524 million in the previous year, reflecting improved operating performance and contributions from recent acquisitions. The company realized over $800 million from asset sales and distributions and invested $300 million to acquire two market-leading businesses. BBU also returned nearly $160 million to its owners through its repurchase program since the start of the year. A secondary transaction involving the sale of interests in three businesses to a new Brookfield-managed evergreen fund was executed at an 8.6% discount to NAV, generating units with an initial redemption value of $690 million. This transaction is expected to provide additional flexibility to accelerate buybacks, reinvest in growth, and reduce debt. Additionally, BBU agreed to privatize First National Financial Corporation, with its share of the equity investment projected at about $145 million. The company's Industrial segment showed significant improvement, generating $307 million in adjusted EBITDA, up from $213 million in 2024, while the Business Services segment posted $205 million, up from $182 million last year. The Infrastructure Services segment saw a decline, attributed to the sale of an offshore oil services' shuttle tanker operation. BBU maintained approximately $2.9 billion in corporate liquidity at the end of the quarter, supporting its capital allocation priorities, including acquisitions, debt reduction, and share buybacks.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 present significant financial risks. Strong cash flows provide some cushion against these risks, but addressing leverage is crucial for 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.45
Neutral
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.30
Negative
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.55
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 30.21B | 40.62B | 53.05B | 57.55B | 46.59B | 37.63B |
| Gross Profit | 6.18B | 5.74B | 2.12B | 4.44B | 3.44B | 5.17B |
| EBITDA | 6.42B | 7.70B | 6.29B | 5.42B | 1.04B | 4.19B |
| Net Income | 33.18M | 15.00M | 482.00M | 355.00M | 2.15B | 580.00M |
Balance Sheet | ||||||
| Total Assets | 75.50B | 75.47B | 82.39B | 89.50B | 64.22B | 54.75B |
| Cash, Cash Equivalents and Short-Term Investments | 15.02B | 4.03B | 3.84B | 2.87B | 2.59B | 2.74B |
| Total Debt | 43.71B | 39.79B | 45.52B | 50.78B | 29.08B | 23.78B |
| Total Liabilities | 60.15B | 58.17B | 63.85B | 71.03B | 51.22B | 43.41B |
| Stockholders Equity | 2.30B | 1.75B | 1.90B | 64.92B | 60.82B | 52.28B |
Cash Flow | ||||||
| Free Cash Flow | 1.92B | 761.00M | -158.00M | -737.00M | 243.00M | 2.80B |
| Operating Cash Flow | 4.16B | 3.28B | 2.13B | 1.01B | 1.69B | 4.21B |
| Investing Cash Flow | -2.46B | -2.33B | 2.54B | -18.72B | -8.93B | -2.33B |
| Financing Cash Flow | -1.22B | -505.00M | -4.37B | 18.07B | 7.06B | -1.08B |
Brookfield Business Partners Technical Analysis
Positive
44.83
Price Trends
36.71
Positive
35.54
Positive
33.87
Positive
Market Momentum
1.51
Negative
78.64
Negative
81.36
Negative
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 44.83 is above the 20-day moving average (MA) of 38.64, above the 50-day MA of 36.71, and above the 200-day MA of 33.87, indicating a bullish trend. The MACD of 1.51 indicates Negative momentum. The RSI at 78.64 is Negative, neither overbought nor oversold. The STOCH value of 81.36 is Negative, 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | C$3.75B | 27.08 | 9.07% | 3.75% | 6.87% | 8.42% | |
71 Outperform | C$1.62B | 16.42 | 22.50% | 2.79% | 8.49% | 14.10% | |
68 Neutral | C$4.26B | 35.86 | 8.94% | ― | 57.21% | 136.79% | |
67 Neutral | C$2.02B | 26.45 | 20.92% | 1.24% | 11.48% | 38.41% | |
57 Neutral | $3.98B | 2.83 | -0.29% | 0.78% | -36.55% | -102.52% | |
57 Neutral | C$4.32B | 23.42 | 24.11% | 2.04% | 3.90% | -57.75% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
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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.