Is Brookfield stock worth buying, selling or holding in 2025?

Brookfield (TSX:BN) is a Canadian company that is making waves internationally. Doing business with Microsoft, the government of Qatar and many other large institutions, is a global player. The company also enjoys great interest from global investors. For example, Bill Ackman from The capital of Pershing Square recently took a stance on this issue.

I wrote about Brookfield quite a bit earlier this year. In particular, I have written articles focusing on discount to net asset value (NAV), an alternative way of calculating book value. Since then, the price of BN shares has increased significantly and is no longer trading at a huge “discount”. However, it is still a very promising company that could benefit greatly from falling interest rates. In this article, I discuss some reasons why Brookfield is still an intriguing buy, despite all the benefits.

Falling interest rates

Interest rates are falling in both the US and Canada. The Bank of Canada has made three cuts of 25 basis points, while the US Fed recently made a single cut of 50 basis points (a basis point is 0.01%). These increases may not seem like much, but remember that if you go from 5% interest rates to 4.5%, a 0.5% bps drop is actually a 10% reduction in interest costs. So relatively “small” interest rate cuts can have a big impact on corporate earnings.

Brookfield is a major beneficiary of this. With $335 billion in debt, it could see a huge drop in interest costs as the Fed and Bank of Canada lower interest rates. In fact, some of the company’s variable-rate debt is probably already getting cheaper – we’ll see when the company’s next earnings release is released. Fixed-rate debt will also be cheaper when you need to refinance.

Quotation

Another factor Brookfield is currently opting for is a cheap valuation. While I can’t say for sure that the previous “NAV discount” BN still exists, it does have some relatively low multipliers, including:

• 13.5 times forward earnings (“forward earnings” refers to analyst estimates of earnings for the next 12 months).
• 0.8 times sales.
• 1.9 times book value.
• 13.6 times operating cash flow.

These are quite modest multiples. And they should go bankrupt if the company continues to grow.

Growth

Speaking of growth, Brookfield is seeing quite good growth in some categories. It has grown at the following compound annual rates (CAGR) over the past five years:

• Revenue: 8%.
• Operating income: 7.8%.
• Total assets: 11.7%.
• Net profit: -21.5%.

While this may not seem like explosive growth, it is important to remember that the company’s net income was impacted by the spin-off of its 25% stake Brookfield Asset management shareholders, and its distributable profits (DE) are much higher than its reported profits. By using DE instead of earnings, Brookfield is growing – especially its insurance subsidiary.

My verdict: buy

Overall, I think Brookfield is still a decent buy. It’s not as obvious as when it was sold at a deep discount to NAV, but it still has significant value under the hood.