Is it a good company at a reasonable price? I would never buy a company with a dividend yield less than 1%. They recently cut the dividends. I do not like this company as its set up is too complex. It keeps reorganizing by this I mean that the Brookfield group companies keep reorganizing. Analysts seem to think it is a good time to buy, but then give a low 12 month stock price. On Stock Chase, one analyst says sell because he thinks the business model is too complex. I agree. However, my testing does suggest that the current stock price is relatively reasonable. And in the past shareholders have done well.
I do not own this stock of Brookfield Corp (TSX-BN, NYSE-BN). I bought this stock as Hees International in 1987 and more in 1988, 1989 and 1990. At first dividends were semi-annual and there were some good dividend increases. There was a much lower dividend increase in 1991. Between 1991 and when I sold in 1999 there was no dividend increases. The stock was going nowhere at that time, so I sold. There have been a lot of name changes and amalgamations since I had this stock.
When I was updating my spreadsheet, I noticed things are as confusing as ever. TD Bank and WSJ have same values as I get, but for some reason others sites do not. The 2023 EPS diluted is $0.62. However, when Yahoo Finance gives estimates for 2024, it lists the EPS for 2023 at $4.14. WSJ list 2023 EPS at $2.08 but it indicates that this was their estimate for 2023. So perhaps that is the same for Yahoo. It is hard to find estimates for this stock. I got estimates for this stock in other years, but there is not much available now.
If you had invested in this company in December 2013, for $1,011.26 you would have bought 69 shares at $14.66 per share. In December 2023, after 10 years you would have received $1,140.78 in dividends. The stock would be worth $3,667.35. Your total return would have been $4,808.13. This would be a total return of 18.24% per year with 13.75% from capital gain and 4.49% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $14.66 | $1,011.26 | 69 | 10 | $1,140.78 | $3,667.35 | $4,808.13 |
The current dividend yield is low with dividend growth restarting. The current dividend yield is low (below 2%) at 0.60%. The 5 and 10 year median dividend yields are also low at 1.40% and 1.75%. The historical median dividend yield is moderate (2% to 4% ranges) at 2.44%. Did a spin-off of asset management business to shareholders in 2022 and in 2023 cut the dividends by 50%. The dividends were raised in 2024 by 14%. Over the past 36 years of data that I have, the dividends were raised 25 times, were flat 8 times and decreased 2 times.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is good at 46% with 5 year coverage is too high at 183%. The DPR for 2023 for Funds from Operations (FFO) is good at 7% with 5 year coverage at 13%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 5% with 5 year coverage at 35%. The DPR for 2023 for Free Cash Flow (FCF) is currently negative with 5 year coverage good at 28%. For FCF sites do not agree on what it is, but seem to agree it was negative in 2023
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 45.90% | 183.11% |
| FFO | 7.34% | 12.71% |
| CFPS | 5.40% | 34.93% |
| FCF | -334.44% | 28.42% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is high at 3.82 and currently at 3.00. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2023 which is fine at 0.99 and currently at 0.98 because this is a more important one for a Financial. The Liquidity Ratio for 2023 is low at 1.35 and 1.44 currently. If you added in Cash Flow after dividends, the ratios are still low at 1.45 and fine currently at 1.53. The Debt Ratio for 2023 is good at 1.52 and 1.51 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.91 and 1.91 and currently at 2.97 and 1.97.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term /A | 0.99 | 0.98 |
| Lg Term R | 3.82 | 3.00 |
| Intang/GW | 1.21 | 0.88 |
| Liquidity | 1.35 | 1.44 |
| Liq. + CF | 1.45 | 1.53 |
| Debt Ratio | 1.52 | 1.51 |
| Leverage | 2.91 | 2.97 |
| D/E Ratio | 1.91 | 1.97 |
The Total Return per year is shown below for years of 5 to 36 to the end of 2023 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. |
|---|---|---|---|---|---|
| 2018 | 5 | -7.46% | 20.67% | 13.75% | 6.91% |
| 2013 | 10 | 2.88% | 18.24% | 13.75% | 4.49% |
| 2008 | 15 | 1.94% | 19.72% | 14.82% | 4.90% |
| 2003 | 20 | 3.49% | 18.57% | 13.55% | 5.02% |
| 1998 | 25 | 4.31% | 18.74% | 13.50% | 5.24% |
| 1993 | 30 | 3.58% | 17.30% | 12.31% | 4.99% |
| 1988 | 35 | 3.58% | 12.18% | 8.96% | 3.22% |
| 1987 | 36 | 3.94% | 13.14% | 9.50% | 3.64% |
The Total Return per year is shown below for years of 5 to 36 to the end of 2023 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. |
|---|---|---|---|---|---|
| 2018 | 5 | -6.89% | 21.37% | 14.42% | 6.95% |
| 2013 | 10 | 0.66% | 15.38% | 11.26% | 4.12% |
| 2008 | 15 | 1.42% | 20.83% | 15.21% | 5.62% |
| 2003 | 20 | 3.37% | 18.97% | 13.43% | 5.54% |
| 1998 | 25 | 4.95% | 20.10% | 14.15% | 5.95% |
| 1993 | 30 | 3.58% | 17.35% | 12.31% | 5.04% |
| 1988 | 35 | 3.28% | 11.82% | 8.64% | 3.18% |
| 1987 | 36 | 3.89% | 13.24% | 9.44% | 3.80% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 15.90, 18.24 and 20.59. The corresponding 10 year ratios are 15.05, 17.27 and 18.42. The corresponding historical ratios are 12.42, 12.48 and 13.58. The current P/E Ratio is 15.22 based on a stock price of $73.75 and EPS estimate for 2024 of $4.85 ($3.51 US$). The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.46, 8.76 and 11.14. The corresponding 10 year ratios are 7.25, 8.61 and 10.79. The current ratio is 12.27 based on a stock price of $53.48 and FFO for last 12 months of $4.36. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$.
I get a Graham Price of $86.65. The 10-year low, median, and high median Price/Graham Price Ratios are 0.92, 1.04 and 1.21. The current P/GP Ratio is 0.85 based on a stock price of $73.75. 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.
I get a 10-year median Price/Book Value per Share Ratio of 1.22. The current P/B Ratio is 1.07 based on a Book Value of $75,246M, Book Value per Share of $48.89 and a stock price of $53.48. The current ratio is 12% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$. You will get a similar result in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 10.51. The current P/CF Ratio is 11.18 based on Cash Flow per Share estimate for 2024 of $3.65, Cash Flow of $5,505M and a stock price of $53.75. The current ratio is 95% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
I get an historical median dividend yield of 2.44%. The current dividend yield is 0.60% based on a stock price of $53.75 and dividends of $0.32. The current dividend yield is 75% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
I get a 10 year median dividend yield of 1.75%. The current dividend yield is 0.60% based on a stock price of $53.75 and dividends of $0.32. The current dividend yield is 66% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 0.70. The current P/S Ratio is 0.83 based on Revenue estimate for 2024 of $97,660M, Revenue per Share of $64.75 and a stock price of $53.75. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. You will get a similar result in CDN$, but difference between current ratio of 0.83 and 10 year ratio of 0.79 is only 5%
Results of stock price testing is that the stock price might still be reasonable. The dividend yield testing works best when dividends are rising. However, dividend cuts are never a good sign. Looking at the dividend yield testing, the stock price is expensive. The current dividends are very low. The P/S Ratio in US$ and reporting is in US$ show that the stock price is still in the reasonableness range but in the top end of the range. The rest of the testing varies from cheap to expensive.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (4), Hold (1), and Sell (1). There is a wide divergence of opinion. The consensus would be a Buy. The 12 month stock price consensus is $60.09 ($43.53 US$) with a high of $70.53 ($51.09 US$) and low of $49.67 ($35.98 US$). The 12 month stock price and recommendations seem out of sync. A 12 month stock price of $60.09 implies a total loss of 17.92% with 18.52 capital loss and 0.60% from dividends based on a current stock price of $73.75.
Analysts on Stock Chase gives this stock lots of buys, but there are Do Not Buy. One says too complex business model, another says dividends are too low and another is concerned that the company owns too many office buildings. Stock Chase gives this stock 5 starts out of 5. Jitendra Parashar on Motley Fool says strong fundamentals suggests it will outperform in the next 5 years. Andrew Button on Motley Fool says he likes value stocks like this company. The company put out a Press Release about their results for 2024. The company put out a Press Release about their second quarters of 2024 results.
Simply Wall Street via Yahoo Finance looks at insider buying. Simply Wall Street has 4 warnings out on this stock of interest payments are not well covered by earnings; earnings have declined by 14.3% per year over past 5 years; significant insider selling over the past 3 months; and large one-off items impacting financial results. Simply Wall Street gives this stock 3 and one half stars out of 5.
Brookfield Corp is an investment firm focused on building long-term wealth for institutions and individuals. It has three businesses Asset Management, Insurance Solutions, and Operating Businesses. it invests in real assets that form the backbone of the economy to deliver risk-adjusted returns to stakeholders. It generates the majority of its revenue from Asset Management. It has a geographic presence in the UK, the United States, Australia, Canada, Brazil, India, and other countries. 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 18, 2024 around 5 pm. Tomorrow on my other blog I will write about Canadian National Railway.... learn more on Thursday, October 17, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment