Brookfield Infrastructure (NYSE:BIPC): Assessing Valuation After Recent Share Price Rebound

Brookfield Infrastructure (NYSE:BIPC) shares have bounced back by nearly 2% after a mixed trading week. Investors seem keen to revisit the company's fundamentals, focusing on recent performance trends and valuation in today's uncertain utility market.

See our latest analysis for Brookfield Infrastructure.

Brookfield Infrastructure’s share price return over the past year reflects a steady climb, while its three-year total shareholder return of 26% suggests durable, long-term growth. Recent momentum indicates that investors are regaining confidence following a cautious stretch.

If recent shifts in sentiment have you curious about what's gaining traction, consider broadening your search and discover fast growing stocks with high insider ownership

With shares recovering and a solid, long-term track record now in focus, the real question for investors is whether Brookfield Infrastructure is currently undervalued or if the market has already priced in any future growth potential.

Price-to-Sales Ratio of 1.4x: Is it justified?

Brookfield Infrastructure’s current price-to-sales ratio stands at 1.4x, placing its valuation above the global gas utilities industry average of 0.8x but below the peer group’s 2.2x. With shares closing at $43.13, this ratio suggests the market may be pricing in some growth or stability despite recent unprofitability.

The price-to-sales (P/S) ratio measures how much investors are paying for every dollar of the company’s sales. This offers insight into how the market values Brookfield Infrastructure’s revenue generation compared to other companies. This metric is especially relevant for utility businesses, where profits can fluctuate due to heavy infrastructure investments. For these companies, revenue provides a more stable benchmarking tool.

Brookfield Infrastructure’s P/S ratio being below peers but higher than the industry average indicates a complex view from the market. While the company’s revenues are valued attractively against its direct competitors, the higher ratio versus the broader industry means expectations for outperformance or quality are built in. Notably, the fair price-to-sales ratio is estimated at 3.8x, which sets a significantly higher level the valuation might approach if market sentiment shifts more positively.

Explore the SWS fair ratio for Brookfield Infrastructure

Result: Price-to-Sales of 1.4x (UNDERVALUED)

However, investors should be mindful that Brookfield Infrastructure reported a net loss. Any slowdown in revenue growth could challenge its current valuation optimism.

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

Another View: Discounted Cash Flow Valuation

Taking a different approach, our SWS DCF model values Brookfield Infrastructure significantly higher and assigns a fair value estimate of $75.75 per share. This suggests the stock is trading at a 43% discount to its intrinsic value, presenting a potentially sizable opportunity. However, does this alternate lens provide the full picture, or are there risks in the assumptions?

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 Infrastructure 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 Infrastructure Narrative

If you believe there’s more to the story or want to dive deeper on your own, you can pull together your own view quickly in just a few minutes, and Do it your way.

A great starting point for your Brookfield Infrastructure research is our analysis highlighting 1 key reward and 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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