Is Brookfield Stock a Buy Now?

Brookfield stock is somewhat legendary. Is it a buy today?

| More on:
Man considering whether to sell or buy

Image source: Getty Images.

Brookfield (TSX:BN) is one of the most talked about Canadian stocks. It’s not one of the biggest, going by market cap, but it is one of the most popular, owing to its management’s sterling reputation. Over the years, Brookfield CEO Bruce Flatt has built up a great reputation as a long-term builder of shareholder value. He practices a conservative value investing approach that has rewarded investors handsomely over the years. Under Flatt’s leadership, Brookfield reportedly compounded its investments at 16% annualized over the last decade, and it acquired many wholly owned subsidiaries. In this article, I will explore Brookfield stock and attempt to determine whether it is a good buy at today’s prices.

What Brookfield owns

Brookfield is an investment company that is involved in managing assets for fees, and in owning assets directly on its balance sheet. Its asset management is largely done through Brookfield Asset Management (TSX:BAM) while its wholly owned subsidiaries are separate from that company. They include:

  • An insurance business.
  • A private equity business.
  • A credit platform (in partnership with Howard Marks’ Oaktree).

This diverse mix of businesses gives Brookfield a piece of both sides of the finance pie: fee-based management and equity ownership. So the company has the power to compound and participate in Brookfield Asset Management’s asset-light high-margin business. There’s a lot to like here. There are some real risks to investors too, though, and they’re worth paying attention to. Check out the video below for more on that.

  • Motley Fool exclusive video: Can Brookfield Fail?

Brookfield’s latest earnings

In its most recent quarter, Brookfield delivered:

  • $23.3 billion in revenue, up 6.4%.
  • $424 million in net income, down 86%.
  • $945 million in distributable earnings, down 0.2%.

The extreme decline in net income might look bad, but it’s not as bad as it appears. It was largely due to decreases in fair values of assets (a non-cash cost that doesn’t impact dividend-paying ability). Take that out and we get a decline in distributable earnings that’s not even 1%. Overall, a relatively satisfactory quarter.


One of the most appealing things about BN stock right now is its valuation. At today’s prices, BN trades at:

  • 11.3 times earnings (specifically, the best estimate of next year’s earnings).
  • 0.5 times sales.
  • 1.2 times book value.
  • 5.8 times operating cash flow.

This is a very cheap stock. And, in fact, insiders seem to agree with this assessment. Just last Friday, Brookfield CEO Bruce Flatt sold many of his BAM shares to buy BN. So, evidently, Flatt believes that BN is the better buy of the two “Brookfields” today. That should tell you everything you need to know.

Foolish takeaway

Brookfield is a true gem of a company. It has a great, high-margin subsidiary in Brookfield Asset Management, and multiple wholly owned companies that are highly profitable in their own right. Bruce Flatt’s track record as CEO speaks for itself. Having compounded the company’s asset values at 16% over 10 years, he has shown that he knows what he’s doing.

So, should you buy BN stock? Well, nobody can ever say to a person they’ve never met that they should buy a stock. You need to meet the other person and find out their individual circumstances. But I would say that Brookfield is more worthy of serious study than the average TSX stock is.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no positions in any of the stocks mentioned. The Motley Fool recommends Brookfield, Brookfield Asset Management, and Brookfield Corporation. The Motley Fool has a disclosure policy.

More on Dividend Stocks

railroad with nature background
Dividend Stocks

CNR Stock Sagged 2% Last Month: Should You Buy the Dip?

CNR stock has surged 1,760% since June 2003 after adjusting for dividends. But is the TSX blue-chip stock a buy…

Read more »

stock analysis
Dividend Stocks

Just Starting to Invest? The 2 Stocks You’ll Want to Buy and Own for Years

When building your portfolio from scratch as a beginner investor, it's a good idea to play it safe with relatively…

Read more »

Growing plant shoots on coins
Dividend Stocks

3 TSX Dividend Stocks With Lucrative Yields in June 2023

Dividend stocks pay you for holding their shares. Aim to buy at a discount to maximize your income while preserving…

Read more »

Pixelated acronym REIT made from cubes, mosaic pattern
Dividend Stocks

The Top Canadian REITs to Buy in June 2023

Canadian investors looking for passive income from real estate investing can consider these top Canadian REITs for monthly income.

Read more »

Retirement plan
Dividend Stocks

Planning for Retirement? Here Are the Best Canadian Dividend Stocks to Buy

Buying two of the best Canadian dividend stocks now for the long term can help you retire without financial worries.

Read more »

investment research
Dividend Stocks

A Dividend Giant I’d Buy Over TD Bank Stock

Energy and financials are the TSX’s sector heavyweights, but I’d choose a dividend giant in the former over a big…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

2 Dividend Stocks Worth a Permanent Spot in My TFSA

Restaurant Brands International (TSX:QSR) and Berkshire Hathaway (NYSE:BRK.B) are two of my top TFSA holdings that I intend to hold…

Read more »

Increasing yield
Dividend Stocks

3 Canadian Dividend Stocks Offering High Yields and Reliable Income

These valuable dividend stocks offer solid deals right now, with ultra-high yields that will certainly last well beyond this downturn.

Read more »