Where Will Brookfield Infrastructure Partners Stock Be in 5 Years?

BIP (TSX:BIP) stock fell dramatically after year-end earnings, but there could be momentum in the future with more acquisitions on hand.

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When it comes to essential items, infrastructure is at the top of the list. And when it comes to companies providing infrastructure, Brookfield Infrastructure Partners (TSX:BIP.UN) is at the top of that list as well.

Yet, you wouldn’t think of it to look at the company’s share price. BIP stock has fallen back by 22% in the last year, and it comes after a major plunge in the last month. Yet, that plunge has led to an increase of 12% in the last two weeks. So, is it time to buy BIP stock now, and is the stock set to continue rising in the next five years?

BIP stock

First, let’s consider what BIP stock does in the first place. The global infrastructure company that owns and operates a diverse portfolio of infrastructure assets. It’s part of the Brookfield Asset Management family of companies, one of the largest alternative asset managers in the world. 

In the case of BIP, the company focuses on acquiring and managing high-quality, long-life assets in sectors such as transportation, energy, utilities, and data infrastructure. The company typically seeks assets with stable cash flows, strong growth potential, and a competitive advantage within their respective markets. 

Its investment strategy involves actively managing and optimizing these assets to generate steady income and long-term value for its investors. Part of this is because it operates on a global scale, with assets located in North and South America, Europe, Asia, and Australia. Its diversified portfolio and global presence help mitigate risks and provide opportunities for growth across different geographies and sectors.

Recent earnings

Overall, the company looks to have a solid and sustainable source of income that investors should have no problem investing in. However, earnings can also demonstrate whether now is the best time to invest or whether it is better to wait. 

For this, we can look at the last three earnings reports to see if there is momentum to be had. In the case of BIP stock in the second quarter, BIP reported funds from operations (FFO) of US$552 million, with a net income of US$378 million. A major benefit came from recently completed acquisitions and realized gains on six asset sales.

By the third quarter, FFO increased to US$560 million, but net income shrunk to US$104 million. So, FFO was up, but net income was down both quarter over quarter and year over year — in part, of course, from the acquisitions and sales as well as higher borrowing costs.

During the fourth quarter, the company achieved its strongest results yet, with FFO reaching US$622 million. However, it reported a loss in net income of US$82 million. 

Considerations

Anything can happen during the next five years. But it seems the company’s recent acquisitions are costing a lot, and there isn’t much performance to back it up in terms of net income. So, as net income now shrinks to a loss, it might be best to stick to the sidelines.

However, if you’re willing to stick it out, one of the benefits is the company continues to trade for a steal. And as mentioned, it’s in the infrastructure arena, where there are stable results that will continue to provide income and allow the stock to expand. Plus, BIP stock also has a whopping 5.86% dividend yield to consider.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management and Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

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