A strong performer from today's morning trading session is Brookfield, whose shares rose 4.2% to $49.11 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
Brookfield's Valuation Is in Line With Its Sector Averages:
Brookfield Corporation is an alternative asset manager and REIT/Real Estate Investment Manager firm focuses on real estate, renewable power, infrastructure and venture capital and private equity assets. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 30.37 and an average price to book (P/B) ratio of 2.09. In contrast, Brookfield has a trailing 12 month P/E ratio of 86.2 and a P/B ratio of 1.8.
When we divideBrookfield's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.16, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
A Declining EPS Growth Trend and Negative Cash Flows:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $56,771 | $67,826 | $62,752 | $75,731 | $92,769 | $95,924 |
| Net Margins | 13% | 8% | 1% | 16% | 6% | 5% |
| Net Income (M) | $7,488 | $5,354 | $707 | $12,388 | $5,195 | $5,105 |
| Net Interest Expense (M) | $4,854 | $7,227 | $7,213 | $7,604 | $10,702 | n/a |
| Depreciation & Amort. (M) | $3,102 | $4,876 | $5,791 | $6,437 | $7,683 | $9,075 |
| Earnings Per Share | $3.4 | $1.73 | -$0.12 | $2.39 | $1.19 | $0.61 |
| EPS Growth | n/a | -49.12% | -106.94% | 2091.67% | -50.21% | -48.74% |
| Free Cash Flow (M) | -$70,658 | -$56,330 | -$18,531 | -$52,957 | -$57,291 | $6,467 |
| CAPEX (M) | $75,817 | $62,658 | $26,872 | $60,831 | $66,042 | n/a |
| Total Debt (M) | $5,969 | $7,083 | $9,077 | $9,963 | $11,390 | $11,984 |
