Is it a good company at a reasonable price? Personally, I would not buy any Brookfield companies. The whole mess is complicated and they continue to restructure. My spreadsheet is showing 10 since 1973. I am sure that this is not for the benefit of people buying shares on the stock exchanges. However, people who have bought Brookfield shares appear to be getting a nice profit. See Total Return charts below. Analysts seem to imply that the stock price is going to up a lot in the next 12 months. Some of the sites seem to be confusing US$ and CDN$ currency in their estimates. Some estimates make no sense to me, so who knows.
I do not own this stock of Brookfield Corp (TSX-BN, NYSE-BN). The company’s statements and reviews are always a pain in the ass. As far as I can see, the stock price is lowered because of the spin off, but they have not reduced other items like Revenue and EPS in connection with the spin-off. Also, the Stock Prices I found on TD, they did not reduce the stock price by 88%, but seemed to have reduced the stock prices by 79%. Brookfield financials and all their different company’s financial have always been difficult. That is why I would not invest in this company or their related companies.
Where I go for estimates, sites do not seem to have switched to having ones for Brookfield Corp with a symbol of BN or there is not much in the way of estimates or estimates that make any sense to me. Perhaps this is because they do not know where this version of Brookfield is going?
When I was updating my spreadsheet, I noticed changes in this stock on December 2, 2022. Brookfield Asset Management (TSX-BAM, NYSE-BAM). Brookfield Asset Management is changing its TSX Symbol from BAM.A to BAM and the company is spinning off asset management business to shareholders and post spinoff, Brookfield Asset Management is renamed Brookfield Corporation with a TSX symbol of BN and spin off will be named Brookfield Asset Management with the TSX symbol of BAM. Brookfield Corp will continue with the Brookfield Dividend of 0.56 US$.
This is a site I found with notes called Stock Spinoff Investing. The Motley Fool staff put out some notes also.
It is interesting that my American site (WSJ) for stock prices, gives stock prices previous to 2022 for Brookfield Corp (BN) but not for the US$ versions of this stock (NYSE-BN) and not for Brookfield Asset Management (NYSE-BAM). My brokerage firm, TD, gives stock prices prior to 2022 for Brookfield Corp (NYSE-BN).
If you had invested in this company in December 2012, for $1,010.60 you would have bought 78 shares at $12.96 per share. In December 2022, after 10 years you would have received $1,402.92 in dividends. The stock would be worth $3,321.24. Your total return would have been $4,724.16. This is a total return would be a total return of 14.92% per year with 9.21% from capital gain and 5.70% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $12.96 | $1,010.60 | 78 | 10 | $1,402.92 | $3,321.24 | $4,724.16 |
The current dividend yield is low with dividend recently cut. The current dividend yield is low (below 2%) at 0.86%. The 5 and 10 year median dividend yields are also low at 1.66% and 1.79%. The historical dividend yield is moderate (2% to 4%) ranges at 2.51%. The dividend had been growing at a moderate rate (8% to 14% ranges) at 8.5% per year over the past year. However, in 2023, the company cut the dividend by 50%.
The Dividend Payout Ratios (DPR) should be fine in 2023. The DPR for 2022 for Earnings per Share (EPS) is 719% with 5 year coverage at 144%. The DPR for 2023 is good, coming in at 26%. The DPR for 2022 for Funds from Operations (FFO) is 15% with 5 year coverage at 14%. The DPR for 2022 for Cash Flow per Share (CFPS) is 114% with 5 year coverage at 36%. The DPR for 2023 is expected to be 5%. The DPR for 2022 for Free Cash Flow (FCF) is 68% with 5 year coverage at 40%. There is some disagreement on what the FCF is for the company, but most of the values are close.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 719.33% | 144.06% |
| FFO | 14.66% | 14.00% |
| CFPS | 113.94% | 36.10% |
| FCF | 67.92% | 40.18% |
There is certainly room for improvement in the Debt Ratios for this company. The Long Term Debt/Covering Assets ratio for 2022 is high at 1.00, but better currently at 0.76. The Intangible and Goodwill/Market Cap Ratio is too high at 1.36, better currently at 1.11, but still high. This means that the company has intangibles on their balance sheet higher than the stock’s market cap. Often when this happens, there would be a write-down. But who knows what Brookfield will do.
The Liquidity Ratio for 2022 is low at 1.43 and adding cash flow after dividends does not help. The Liquidity Ratio including cash flow after dividends is currently at 1.58 and this is fine. I prefer this value to be 1.50 or higher. The Debt Ratio for 2022 is a bit low at 1.47 but fine. However, I do like this ratio to be 1.50 or higher. The current one is close to this. The Leverage and Debt/Equity Ratios for 2022 ae too high at 3.11 and 2.11. I prefer these to be below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term /A | 1.00 | 0.76 |
| Lg Term R | 4.32 | 3.91 |
| Intang/GW | 1.36 | 1.11 |
| Liquidity | 1.43 | 1.41 |
| Liq. + CF | 1.35 | 1.58 |
| Debt Ratio | 1.47 | 1.48 |
| Leverage | 3.11 | 3.07 |
| D/E Ratio | 2.11 | 2.07 |
The Total Return per year is shown below for years of 5 to 35 to the end of 2022 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | 9.74% | 14.74% | 7.85% | 6.89% |
| 2012 | 10 | 12.02% | 18.75% | 12.63% | 6.12% |
| 2007 | 15 | 9.06% | 12.84% | 8.51% | 4.33% |
| 2002 | 20 | 6.82% | 19.22% | 13.56% | 5.65% |
| 1997 | 25 | 7.34% | 16.27% | 11.60% | 4.67% |
| 1992 | 30 | 6.08% | 22.34% | 13.97% | 8.37% |
| 1987 | 35 | 6.21% | 12.97% | 9.09% | 3.88% |
The Total Return per year is shown below for years of 5 to 35 to the end of 2022 in US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | 8.45% | 13.06% | 6.26% | 6.80% |
| 2012 | 10 | 8.64% | 14.92% | 9.21% | 5.70% |
| 2007 | 15 | 6.80% | 10.38% | 6.24% | 4.14% |
| 2002 | 20 | 7.64% | 21.30% | 14.34% | 6.97% |
| 1997 | 25 | 7.56% | 16.88% | 11.83% | 5.06% |
| 1992 | 30 | 5.86% | 21.78% | 13.73% | 8.05% |
| 1987 | 35 | 6.08% | 13.04% | 8.96% | 4.07% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 14.21, 16.34 and 18.47. The corresponding 10 year ratios are 13.41, 14.41 and 15.36. The corresponding historical ratios are 11.95, 12.33 and 12.96. The current P/E Ratio is 9.70 based on a stock price of $43.94 and EPS estimate for 2023 of $4.53 ($3.32 US$). The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I also have Distributable Cash (DC) data. The 5-year low, median, and high median Price/ Distributable Cash per Share Ratios are 9.50, 12.33 and 14.61. The corresponding 6 year ratios are 10.39, 12.82 and 14.89. The current P/DC Ratio is 8.94 based on a stock price of $32.02 and FFO estimate for 2023 of $3.58. This ratio is below the low ratio of the 6 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations per Share Ratios are 6.74, 8.47 and 11.4. The corresponding 10 year ratios are 6.90, 8.37 and 10.79. The current P/FFO Ratio is 9.85 based on a stock price of $32.02 and FFO estimate for 2023 of $3.25. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$.
I get a Graham Price of $60.87. The 10-year low, median, and high median Price/Graham Price Ratios are 0.87, 0.99 and 1.06. The current P/GP Ratio is 0.72 based on a stock price of $43.94. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 1.22. The current P/B Ratio is 1.20 based on a Book Value of $41,652M, Book Value per Share of $26.63 and a stock price of $32.02. The current ratio is 2% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get a similar result in CDN$.
I also have a Book Value per Share estimate of $27.00 for 2023. This implies a ratio of 1.19 with a stock price of $32.02 and Book Value of $42,224M. This ratio is 3% below the 10 year median ratio of 1.22. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 7.51. The current P/CF Ratio is 5.55 based on a stock price of $32.02, Cash Flow per Share estimate for 2023 of $5.77 and Cash Flow of $9,024M. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
I get an historical median dividend yield of 2.51%. The current dividend yield is 0.87% based on dividends of $0.28 and a stock price of $32.02. This dividend yield is 65% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 1.79%. The current dividend yield is 0.87% based on dividends of $0.28 and a stock price of $32.02. This dividend yield is 51% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 0.86. The current ratio is 0.53 based on Revenue estimate for 2023 of $130,820M, Revenue per Share of $83.65 and a stock price of $43.94. The current ratio is 39% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price could be relatively reasonable and could be relatively expensive. I did the best I could on estimates. Some estimates made no sense when they gave the value for 2022 compared to the financial statements. Some estimates said that they were in US$ when clearly, from 2022 value they were in CDN$. Some sites have nothing currently for the company, but list all the other Brookfield companies.
The dividend yield tests are pointing to an expensive stock price. The problem is the cut in dividends. This is never a good sign. The dividends were cut 50%, but Brookfield Corp said it retained 88% of the old company. Also, since the dividend yield is so low can we really consider this stock a dividend stock? The Revenue estimates imply that the stock price is cheap. Between cheap and expensive is reasonable. Other testing is pointing to cheap or reasonable stock price.
When I look at analysts’ recommendations, I find Strong Buy (7), Buy (1), Hold (2), Underperform (1). The consensus is a Buy. The 12 month target price is $61.20 with a high of $88.45 and low of $37.00. This appears to be in CDN$. The 12 month stock price target implies a total return of 40.15% with 39.28% from capital gains and 0.87% from dividends.
There are lots of comments on Stock Chase for this stock. Mostly they are a buy, but there are some Do Not Buy. Some just do not think they will do well in the near future. Stock Chase gives them 5 stars out of 5. They are on all the dividend lists I follow. Kay Ng on Motley Fool says buy because it is cheap, but buy for capital gains not dividends. Andrew Button on Motley Fool likes this company because it is big and it has a long history. (It has a long history of restructuring from my point of view and that is not good for shareholders.) The company put out a Press Release about their 2022 year end results. The company put out a Press Release on their results for the second quarter of 2023.
Simply Wall Street gives this stock 1 and one half stars out of 5. Simply Wall Street has 4 warnings of interest payments are not well covered by earnings; earnings have declined by 6.6% per year over past 5 years; large one-off items impacting financial results; and profit margins (0.2%) are lower than last year (4.2%).
Brookfield Corp owns and manages the commercial property, power, and infrastructure assets. Its investment focus includes Real Estate, Infrastructure, Renewable Power, and Private Equity. The company generates the majority revenue through Private Equity. Located around the world, its assets are concentrated in the United States, and Canada. Its web site is here Brookfield Corp .
The last stock I wrote about was about was Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more. The next stock I will write about will be CCL Industries Inc (TSX-CCL.B, OTC-CCDBF) ... learn more on Friday, October 20, 2023 around 5 pm. Tomorrow on my other blog I will write about Investing Newsletters.... learn more on Thursday, October 19, 2023 around 5 pm.
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