Brookfield Business Partners (BBU.UN) AI Stock Analysis

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TSE:BBU.UN Dividends

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Brookfield Business Partners

(NYSE:BBU.UN)

60Neutral

Brookfield Business Partners shows strength in operational metrics with record EBITDA and strategic initiatives. However, high financial leverage and recent net losses pose significant risks. The technical analysis suggests bearish momentum, and valuation metrics are concerning due to negative earnings. Overall, while there are positive elements, the company's financial risk and market sentiment weigh on the stock's attractiveness.

Positive Factors

Debt Reduction

An improving backdrop for monetizations and strengthening cash flow profile provide a pathway for BBU to reduce corporate-level debt, which should be supportive for valuation.

Financial Performance

Attractive upside to current financial performance.

Value Creation

Over the next 3-5 years, the value creation plans underway at the portfolio companies are anticipated to increase EBITDA to $2.8B, up ~$500M (>20%) from current levels.

Negative Factors

Market Volatility

Although financial markets are steadily improving, potential volatility could impact the effectiveness of multiple exit strategies, including IPOs and the sale of minority interests.

Brookfield Business Partners (BBU.UN) vs. S&P 500 (SPY)

Market Cap

C$2.67B

Dividend Yield1.14%

Average Volume (3M)41.63K

Price to Earnings (P/E)2.8

Beta (1Y)1.80

Revenue Growth-20.99%

EPS Growth-108.53%

CountryCA

Employees72,000

SectorIndustrials

Sector Strength75

IndustryConglomerates

Share Statistics

EPS (TTM)-0.75

Shares Outstanding89,376,396

10 Day Avg. Volume35,359

30 Day Avg. Volume41,630

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap29.21

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit13.59

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$41.05

Price Target Upside37.46% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering3

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 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 Financial Statement Overview

Summary

Brookfield Business Partners is facing a challenging financial landscape. While operational efficiency has improved, as seen in better margins, revenue decline and high leverage are major concerns. The company needs to address its high debt levels and improve cash flow stability to ensure long-term financial health.

Income Statement

Positive

The company's income statement shows mixed performance. Revenue has decreased from the previous year, indicating a negative revenue growth rate. However, the gross profit margin improved to 9.16% from 7.72% in 2022. The net profit margin for 2023 is 0.88%, showing a slight improvement over the previous year's 0.62%. The EBIT margin has improved significantly to 6.37% from a negative margin in 2022, indicating better operational efficiency. The EBITDA margin is robust at 12.90%, suggesting strong earnings before interest, taxes, depreciation, and amortization.

Balance Sheet

Negative

The balance sheet presents some concerns. The debt-to-equity ratio has increased significantly to 23.84 from 2.75 in 2022, indicating high leverage and potential financial risk. Return on equity has decreased dramatically to 25.25% from 1.92%, showing poor utilization of equity. The equity ratio has dropped to 2.32%, down from 20.63% in 2022, indicating a decline in the proportion of assets funded by shareholders' equity.

Cash Flow

Neutral

Cash flow analysis indicates challenges. The free cash flow for 2023 is negative, but the free cash flow growth rate improved significantly from the previous year's negative figure. The operating cash flow to net income ratio is 4.42, suggesting better cash conversion. However, the free cash flow to net income ratio is negative, highlighting ongoing cash flow issues.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
40.62B	55.07B	57.55B	46.59B	37.63B
	Gross Profit
5.74B	5.05B	4.44B	3.44B	5.17B
	EBIT
4.47B	3.51B	-226.00M	-1.24B	2.03B
	EBITDA
7.67B	7.10B	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
0.00	1.91B	18.46B	13.00B	11.34B
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

Neutral

Last Price29.86

Price Trends

50DMA

32.30

Negative

100DMA

32.49

Negative

200DMA

31.41

Negative

Market Momentum

MACD

-0.63

Negative

RSI

49.59

Neutral

STOCH

76.99

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:BBU.UN, the sentiment is Neutral. The current price of 29.86 is above the 20-day moving average (MA) of 29.54, below the 50-day MA of 32.30, and below the 200-day MA of 31.41, indicating a neutral trend. The MACD of -0.63 indicates Negative momentum. The RSI at 49.59 is Neutral, neither overbought nor oversold. The STOCH value of 76.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTT	81 Outperform	C$5.26B	10.79	19.79%	2.83%	6.45%	2.60%
WN	76 Outperform	C$34.41B	26.77	21.04%	1.22%	2.47%	-7.67%
EIF	73 Outperform	C$2.60B	19.88	9.13%	5.21%	6.46%	-5.54%
Sector *	63 Neutral	$4.23B	11.54	5.34%	209.77%	4.14%	-9.49%
BBU.UN	60 Neutral	C$2.67B	2.83	-2.02%	1.14%	-20.99%	-108.53%
BIP	54 Neutral	$19.56B	2,778.70	0.96%	5.48%	17.33%	-92.62%

* Industrials Sector Average

Performance Comparison

TSE:BBU.UN

Brookfield Business Partners

29.86

4.25

16.61%

BIP

Brookfield Infrastructure

30.11

3.11

11.52%

BEP

Brookfield Renewable Partners

23.19

-0.09

-0.39%

TSE:EIF

Exchange Income

51.27

7.49

17.11%

TSE:FTT

Finning International

39.11

-0.61

-1.54%

TSE:WN

George Weston

266.25

84.35

46.37%

Brookfield Business Partners Earnings Call Summary

Earnings Call Date:Jan 31, 2025

(Q4-2024)

% Change Since: -4.05%|

Next Earnings Date:May 02, 2025

Earnings Call Sentiment Positive

The earnings call reflects a positive sentiment overall with significant achievements such as record EBITDA, strategic capital recycling, and successful debt financing at Clarios. However, there are notable challenges including a net loss primarily due to impairments and underperformance in certain segments.

Q4-2024 Updates

Positive Updates

Record Full Year Adjusted EBITDA

Achieved a record full year adjusted EBITDA of $2.6 billion, with margins increasing to over 20%.

Strong Capital Recycling Initiatives

Generated more than $2 billion from capital recycling initiatives, including $1 billion from monetizations and distributions.

Successful Debt Raise at Clarios

Completed an oversubscribed debt raise at Clarios, funding a $4.5 billion distribution with BBU's share being $1.2 billion, representing a 1.5x multiple of the investment.

New $250 Million Share Buyback Program

Announced a $250 million share buyback program, aimed at being accretive to the per unit value of BBU.

Acquisition of Chemelex

Completed the acquisition of Chemelex, with BBU's share of the equity investment at approximately $210 million.

Strong Performance of Clarios

Clarios maintains a strong trajectory with increasing earnings and cash flows, and holds a leading market position globally.

Negative Updates

Net Loss for the Year

Generated a net loss of $109 million in 2024, primarily due to impairments in healthcare services and natural gas producer.

Challenges at Healthscope

Healthscope faces ongoing challenges with a mismatch between revenue growth and cost escalation.

Decreased EBITDA in Business Services Segment

Business Services segment generated $832 million, down from $900 million in 2023.

Decline in Infrastructure Services Segment

Infrastructure Services segment generated $606 million, down from $853 million in 2023.

Company Guidance

During the Brookfield Business Partners Fourth Quarter 2024 Results Conference Call, guidance was provided on several key metrics and strategic initiatives. The company reported a record full-year adjusted EBITDA of $2.6 billion, with margins increasing to over 20%. Over the past year, capital recycling initiatives generated more than $2 billion, including about $1 billion from monetizations and distributions funded by ongoing operations. A $4.5 billion distribution was funded through an upfinancing at Clarios, with Brookfield Business Partners' share equating to a 1.5 times multiple of their investment. The company announced a new $250 million share buyback program, aiming to be active in regular market buybacks and block repurchases. Additionally, they completed a $210 million equity investment in Chemelex, focusing on optimizing operations and leveraging the Brookfield platform for growth. The company remains confident in the resilience of its businesses and continues to target strong cash flow returns through strategic investments and operational improvements.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.