Brookfield Corp (TSX:BN) is one of Canada’s most distinguished financial services companies. Active in asset management, real estate, infrastructure and insurance, it is a real giant in the world of investing. Its broader ecosystem of companies would be Canada’s largest company if all of them were owned by one entity. So, while Brookfield does not have quite the name recognition that the big banks do, it has plenty of influence.
Brookfield’s performance over the years has been phenomenal. Compounding its book value at about 16% per year over the last 10 years, it has outperformed the S&P 500, and even Berkshire Hathaway. It’s quite a track record, especially for a company that is over 100 years old.
You might think that, with all the success it has had, Brookfield would be long in the tooth. But in fact, the company is even better positioned now than it was in the past. Brookfield’s asset management subsidiary has over $130 billion worth of cash to invest for its shareholders, cash that could bring in $1.3 billion per year in new fees once invested. Additionally, BN is doing buybacks and returning wealth to shareholders. There are many things happening right now that bode well for Brookfield and its fortunes going forward. In this article, I share why I think Brookfield will beat the market going forward.
High growth
The first thing that Brookfield has going for it is high growth. In the most recent quarter, its distributable earnings grew 23.4% – far above average for a Canadian financial services company in the same period. In the TTM period, it grew its operating earnings at 24%. Over the very long term, it has compounded its assets at 16%. So, the company is definitely growing.
Quality assets
Speaking of assets, Brookfield has a number of extremely valuable assets on its balance sheet. It owns numerous real estate “trophy properties” that have premium valuations and are located in prestigious areas. It also owns much of the world’s essential infrastructure – cell towers, utilities, and more. All of these assets add up to give Brookfield a very impressive position in the global economy.
A modest valuation
Last but not least, Brookfield Corp trades at a modest valuation. Despite all of its growth prospects, it trades at just 15 times distributable earnings, 1.01 times sales, and 2 times book value. BN stock is actually trading at a discount to the market value of its assets net of debt (NAV, an alternative way of calculating book value). So, Brookfield is looking cheap here.
Foolish takeaway
Brookfield Corp has so many things going for it today that it’s easy to see it outperforming the market. Its earnings are growing. It’s buying back stock. It’s got some of the world’s best assets. And many of its companies are absolutely indispensable in the lives of consumers. Brookfield Corp has outperformed both the TSX and the S&P 500, thanks to its focus on delivering shareholder value. This stellar track record appears likely to continue.
