Is Brookfield Corp a Buy After Their Latest Earnings Report?
Key Points
Brookfield Corporation's earnings rose 7%.
The company is simplifying its corporate structure.
It's also continuing to execute its AI infrastructure investment strategy.
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Brookfield Corporation (NYSE: BN) reported its first-quarter results on May 14. The global investment firm's earnings growth rate reaccelerated as it delivered solid results across its platform.
Here's a look at the company's first-quarter results and whether now's the time to buy the financial stock.
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The reacceleration begins
Brookfield Corporation generated nearly $1.4 billion, or $0.59 per share, of distributable earnings before realizations. That's a 7% increase compared to the first quarter of last year (and 6% higher on a per-share basis). It's also a reacceleration from the fourth quarter, when its earnings didn't grow.
Brookfield's alternative investment management business was a notable growth catalyst. It generated an 11% increase in fee-related earnings during the period, driven by a 12% increase in fee-related capital as Brookfield Asset Management (NYSE: BAM) raised capital from investors and deployed it into new investments.
That helped offset flat results within Brookfield Wealth Solutions (NYSE: BNT) and lower results within its operating businesses (largely due to weaker earnings from Brookfield Property Group). However, those two platforms still performed well. Brookfield Wealth Solutions generated $4 billion in annuity sales during the quarter, and closed its acquisition of Just Group after the quarter ended, significantly expanding its operations in the U.K. Meanwhile, Brookfield's infrastructure, energy, and private equity operating businesses continue to generate strong earnings, while its real estate portfolio is seeing strong leasing momentum.
Brookfield also capitalized on the opportunity to repurchase over $1 billion in shares this year. It bought $470 million of its own shares and another $575 million of Brookfield Asset Management shares, as they trade well below their estimated value. It owns 74% of Brookfield Asset Management's outstanding shares.
Catalysts galore
Brookfield is in the middle of an initiative to streamline its corporate structure. It's advancing plans to combine Brookfield Corporation with Brookfield Wealth Solutions to create a fully integrated insurance and investment business. The combination will enhance its capital efficiency and flexibility, supporting its ability to deploy capital into attractive investment opportunities. This move builds on the success the company had when it combined its private business entity (Brookfield Business) earlier this year. Brookfield is also exploring combining its infrastructure (Brookfield Infrastructure Partners/Corporation) and energy (Brookfield Renewable Partners/Corporation) operating businesses. These combinations will simplify corporate structures and increase market capitalizations, unlocking value for shareholders.
The company also continues to execute its AI infrastructure investment strategy. For example, Brookfield Asset Management recently agreed to invest $500 million in a strategic partnership with OpenAI. The investment will help companies move from pilot AI use cases to scaled, enterprisewide deployment. Meanwhile, its operating businesses are investing in data centers, power solutions, equipment leasing platforms, and renewable energy to support the build-out of AI infrastructure.
AI infrastructure and other growth catalysts support Brookfield Corporation's expectation of delivering 25% compound annual earnings growth over the next five years. That should increase the company's value to $140 a share by 2030.
Brookfield is a buy
Brookfield Corporation's earnings growth rate is reaccelerating, which should continue in the coming quarters. While it's experiencing an earnings-driven pop (up about 5% the morning it reported its results), shares still trade well below its estimated value of $68 per share (the stock recently traded at $47 per share). That makes Brookfield look like a great buy after its earnings report.
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Matt DiLallo has positions in Brookfield Asset Management, Brookfield Corporation, Brookfield Infrastructure, Brookfield Infrastructure Partners, Brookfield Renewable, and Brookfield Renewable Partners and has the following options: short July 2026 $40 puts on Brookfield Corporation. The Motley Fool has positions in and recommends Brookfield Asset Management, Brookfield Corporation, and Brookfield Wealth Solutions. The Motley Fool recommends Brookfield Infrastructure Partners, Brookfield Renewable, and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
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