Critical Review: Brookfield (BN) & The Competition

Brookfield (NYSE:BN) is one of 1,744 publicly-traded companies in the “Capital Markets” industry, but how does it weigh in compared to its peers? We will compare Brookfield to similar businesses based on the strength of its institutional ownership, earnings, analyst recommendations, valuation, profitability, dividends and risk.

Valuation and Earnings

This table compares Brookfield and its peers gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Brookfield	$75.10 billion	$1.31 billion	78.17
Brookfield Competitors	$2.39 billion	$398.52 million	17.43

Brookfield has higher revenue and earnings than its peers. Brookfield is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Dividends

Brookfield pays an annual dividend of $0.28 per share and has a dividend yield of 0.7%. Brookfield pays out 50.9% of its earnings in the form of a dividend. As a group, “Capital Markets” companies pay a dividend yield of 3.2% and pay out 30.0% of their earnings in the form of a dividend. Brookfield has increased its dividend for 2 consecutive years. Brookfield lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Insider and Institutional Ownership

61.6% of Brookfield shares are held by institutional investors. Comparatively, 30.5% of shares of all “Capital Markets” companies are held by institutional investors. 11.0% of Brookfield shares are held by company insiders. Comparatively, 12.9% of shares of all “Capital Markets” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Brookfield and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brookfield	1.85%	3.93%	1.22%
Brookfield Competitors	321.05%	79.19%	3.72%

Analyst Recommendations

This is a summary of current ratings and target prices for Brookfield and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brookfield	1	1	10	1	2.85
Brookfield Competitors	5549	20118	22452	642	2.37

Brookfield currently has a consensus price target of $57.40, suggesting a potential upside of 33.51%. As a group, “Capital Markets” companies have a potential upside of 23.00%. Given Brookfield’s stronger consensus rating and higher possible upside, analysts plainly believe Brookfield is more favorable than its peers.

Risk and Volatility

Brookfield has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500. Comparatively, Brookfield’s peers have a beta of 0.80, indicating that their average share price is 20% less volatile than the S&P 500.

Summary

Brookfield beats its peers on 9 of the 15 factors compared.

Brookfield Company Profile

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. It manages a range of public and private investment products and services for institutional and retail clients. It typically makes investments in sizeable, premier assets across geographies and asset classes. It invests both its own capital as well as capital from other investors. Within private equity and venture capital, it focuses on acquisition, early ventures, control buyouts and financially distressed, buyouts and corporate carve-outs, recapitalizations, convertible, senior and mezzanine financings, operational and capital structure restructuring, strategic re-direction, turnaround, and under-performing midmarket companies. It invests in both public debt and equity markets. It invests in private equity sectors with focus on Business Services include infrastructure, healthcare, road fuel distribution and marketing, construction and real estate; Industrials include manufacturers of automotive batteries, graphite electrodes, returnable plastic packaging, and sanitation management and development; and Residential/ infrastructure services. It targets companies which likely possess underlying real assets, primarily in sectors such as industrial products, building materials, metals, mining, homebuilding, oil and gas, paper and packaging, manufacturing and forest product sectors. It invests globally with focus on North America including Brazil, the United States, Canada; Europe; and Australia; and Asia-Pacific. The firm considers equity investments in the range of $2 million to $500 million. It has a four-year investment period and a 10-year term with two one-year extensions. The firm prefers to take minority stake and majority stake. Brookfield Corporation was founded in 1997 and based in Toronto, Canada with additional offices across Northern America; South America; Europe; Middle East and Asia.