Brookfield Business (NYSE:BBUC) Valuation: What the Corporate Restructuring Could Mean for Investors

Brookfield Business (NYSE:BBUC) shares set a fresh record on news the company will streamline its corporate structure by shifting from a dual-entity framework to a single, publicly traded Canadian corporation named BBU Inc.

See our latest analysis for Brookfield Business.

This breakout to record highs seems to reflect optimism around the company's restructuring plans. Investors have warmed to the idea that a streamlined structure could unlock value, which has helped fuel the impressive 46.5% year-to-date share price return and a three-year total shareholder return of 65%. While there was a modest dip in the latest session, momentum overall looks strong as the market weighs the potential benefits of the upcoming changes.

If this kind of corporate transformation has you thinking more broadly about opportunity, now could be the perfect time to discover fast growing stocks with high insider ownership

With shares rallying and restructuring news driving sentiment, the key question now is whether Brookfield Business remains undervalued by the market or if the recent run-up has already priced in the company’s future growth potential.

Price-to-Sales Ratio of 0.3x: Is it justified?

Brookfield Business trades at a price-to-sales (P/S) ratio of 0.3x, putting it well below both peer and industry averages. This suggests the stock remains attractively valued relative to its revenue base. With a last close price of $35.8, the market is assigning a lower revenue multiple than is typical in this sector.

The price-to-sales ratio measures how much investors are willing to pay for each dollar of revenue generated. For diversified industrial companies that are not currently profitable, this multiple is often favored over earnings-based measures because it provides a more stable gauge of fundamental value.

At 0.3x P/S, Brookfield Business is being valued at less than a third of the average peer multiple of 1.1x and notably below the global industrials industry average of 0.8x. This steep discount signals that the company may be overlooked by the market, particularly if future restructuring leads to improved profitability or operational efficiency.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Sales Ratio of 0.3x (UNDERVALUED)

However, investors should keep in mind that weak profitability or slower-than-expected progress on restructuring could challenge the bullish case for Brookfield Business.

Find out about the key risks to this Brookfield Business narrative.

Another View: DCF Model Comes to a Different Conclusion

While the low price-to-sales ratio suggests Brookfield Business is undervalued, our DCF model draws a very different picture. It estimates a fair value of just $0.85 per share. This makes the recent share price of $35.8 appear significantly overvalued. Is the market seeing something the model is missing, or are risks being overlooked?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Brookfield Business for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Brookfield Business Narrative

If you have a different perspective or want to dig deeper into the numbers yourself, you can build your own Brookfield Business view in just a few minutes. Do it your way

A great starting point for your Brookfield Business research is our analysis highlighting 2 important warning signs that could impact your investment decision.

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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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