Assessing Brookfield Asset Management After New Investment Partnerships and Recent Price Moves

• Wondering if Brookfield Asset Management is currently a bargain? You are not alone. Many investors are eyeing this financial giant to see if now is the right time to buy in.
• In the past week, the stock is up 2.7%, but it is still down 4.3% over the last month and has slipped 6.2% in the past year, hinting at some mixed sentiment and shifting risks.
• Recent headlines around Brookfield Asset Management have focused on its new investment partnerships and asset management mandates, generating plenty of buzz within financial circles. These moves have provided momentum but also highlight the dynamic environment the company is competing in.
• Currently, Brookfield Asset Management has a valuation score of 1 out of 6 on our checks, suggesting limited undervaluation opportunities right now. We will break down exactly what this means using a few different approaches and touch on what might be a better way to spot value than the standard methods you often hear about.

Brookfield Asset Management scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Brookfield Asset Management Excess Returns Analysis

The Excess Returns valuation approach is designed to estimate a company’s intrinsic value by focusing on how much profit it can generate above its cost of equity. This model considers not only the returns Brookfield Asset Management earns on its investments, but also whether those returns exceed what investors could theoretically earn elsewhere at similar risk levels.

For Brookfield Asset Management, analysts estimate a Book Value of CA$5.25 per share and a Stable EPS of CA$2.25 per share. These figures are sourced from weighted future Return on Equity estimates from five analysts. The Cost of Equity is CA$0.47 per share, which leaves an Excess Return of CA$1.78 per share. The company’s average Return on Equity stands at a robust 36.40%. In addition, the Stable Book Value is projected at CA$6.17 per share, based on the insights of four analysts.

According to this model, the intrinsic value for Brookfield Asset Management is roughly CA$60.08 per share. The stock trades at a 21.7% premium to this value, suggesting it is currently overvalued by this metric.

Result: OVERVALUED

Our Excess Returns analysis suggests Brookfield Asset Management may be overvalued by 21.7%. Discover 926 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Brookfield Asset Management.

Approach 2: Brookfield Asset Management Price vs Earnings

The Price-to-Earnings (PE) ratio is a key metric for evaluating profitable companies like Brookfield Asset Management because it measures how much investors are willing to pay today for a dollar of the company’s earnings. Companies with strong and predictable earnings streams generally warrant a closer look at this multiple, as it reflects both current profit and expectations for future growth.

Growth prospects and risk both play a major role in determining what a “normal” or “fair” PE ratio should be. Higher earnings growth typically supports a higher acceptable PE, while greater risk usually warrants a lower multiple. For Brookfield Asset Management, the current PE ratio stands at 32.1x. This is several times higher than the Capital Markets industry average of 9.4x and also below the peer group average of 49.4x. This signals that the market assigns Brookfield a significant premium to the industry, but still sees it as more modestly valued than comparable peers.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in. The Fair Ratio for Brookfield Asset Management is 27.8x, which represents what investors might reasonably pay for the stock given factors like its projected earnings growth, industry norms, profit margins, market cap, and company-specific risks. Unlike a simple peer or industry comparison, the Fair Ratio adapts to Brookfield’s unique profile and offers a more informed benchmark for fair value.

Since Brookfield’s current PE ratio of 32.1x is moderately above the Fair Ratio of 27.8x, the stock appears slightly overvalued using this method.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1432 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Brookfield Asset Management Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your unique story behind the numbers, built from your own outlook on a company’s future revenue, earnings, profit margins, and ultimately, fair value. Instead of just relying on standard metrics, Narratives empower you to connect Brookfield Asset Management’s story to your own financial forecast and see how your perspective stacks up.

This tool is simple and accessible on Simply Wall St’s Community page, where millions of investors share and discover fresh perspectives. Narratives help you make more informed decisions by clearly showing how your estimated Fair Value compares to today’s price, adapting instantly as news or earnings are released.

For example, while one Brookfield Narrative currently projects a far higher fair value based on aggressive growth expectations, another investor’s Narrative takes a much more conservative stance reflecting recent risks. No matter your view, Narratives make it easy to compare, update, and act on your investing story.

Do you think there's more to the story for Brookfield Asset Management? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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