Brookfield Infrastructure Partners (BIP) is a publicly-traded limited partnership fund that acquires and manages infrastructure assets globally. I’m bullish on the stock. (See today’s best-performing stocks on TipRanks)
Recent Acquisitions
The fund has made two critical acquisitions ahead of the implementation of the U.S.’s $1 trillion infrastructure bill.
On September 3, Brookfield closed an additional 4.3% stake in Inter Pipeline (raising its ownership to 73%). Brookfield now owns a controlling interest in the energy infrastructure company and has the capacity to implement restructuring processes to the advantage of Brookfield’s shareholders.
In addition to expanding its pipeline portfolio, Brookfield Infrastructure has recently agreed to a deal with Next Era Energy to purchase 19.9% of its regulated transmission businesses.
The three subsidiaries that are included in the deal are American Transmission Systems, Mid-Atlantic Interstate Transmission, and Trans-Allegheny Interstate Line Company, which operate more than 24 miles of electricity supply lines in the U.S. midwest and mid-Atlantic terrains.
Earnings
Brookfield Infrastructure managed to blast past earnings expectations in its Q3 earnings release with year-over-year funds from operations (FFO) growth of 16% and revenue growth of 33%; The fund also managed to beat its EPS estimate by $0.69.
Following the release of its results, Brookfield declared a $0.51 quarterly dividend via its infrastructure fund, presenting a 3.4% forward dividend yield to investors.
Key Metrics
This type of listed entity needs to be analyzed through the lens of its funds from operations, as it’s a flow-through special purpose vehicle that generates its revenue from holding underlying assets.
Total FFO increased by 16% year-over-year, per unit FFO increased by 13%, and in turn, distributions to shareholders increased by 5.2%.
Furthermore, the vehicle’s ROIC increased to 12% from 11%, indicating efficiency across its Financing, Investing, and Operating divisions.
Brookfield Infrastructure has managed to add a substantial amount of value to its balance sheet during the past year, and this is perfectly reflected in its 21% year-over-year increase in total assets, eclipsing its borrowing increase of only 8.4%
Wall Street’s Take
Turning to Wall Street, Brookfield Infrastructure earns a Strong Buy consensus rating. There have been eight ratings on the stock, with six Buys and two Hold ratings.
The average Brookfield Infrastructure price target of $63.38 implies 4.4% upside potential. Andrew Kuske of Credit Suisse (CS) was the latest analyst to provide a price target, Kuske thinks the stock is a hold and could reach the $63.00 mark.
Concluding Thoughts
Brookfield Infrastructure Partners has added to its asset base at the perfect time as it’s about to get a helping hand from the U.S.’s infrastructure bill. Key metrics indicate that the stock is primed for further growth in capital gains and dividends.
Disclosure: At the time of publication, Steve Gray Booyens had a long position in BIP.
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