Assessing Brookfield Infrastructure’s Valuation After Recent Share Price Pullback

What Brookfield Infrastructure’s recent performance tells you

Brookfield Infrastructure (BIPC) has drawn attention after a recent pullback, with the stock showing a 1.2% decline over the past day and a 6.8% decline over the past week, following a last close of US$46.50.

See our latest analysis for Brookfield Infrastructure.

That recent 6.8% 7 day share price decline and softer 30 day share price return of 5.35% come after a year in which total shareholder return sits at 29.8%. This hints that momentum has cooled in the short term while longer term holders have still seen positive outcomes.

If Brookfield Infrastructure’s pullback has you thinking about where growth and income might intersect next, it could be worth scanning 24 power grid technology and infrastructure stocks as another way to source ideas in the wider infrastructure and utilities space.

Brookfield Infrastructure now trades at US$46.50 following a recent pullback, with a value score of 2 and a loss of US$241 million against US$3,668 million in revenue. So is this weakness an opening, or is the market already pricing in future growth?

Most Popular Narrative: 18.6% Undervalued

According to the most followed valuation narrative, Brookfield Infrastructure’s fair value sits at $57.14, compared with the recent last close of $46.50, which puts the spotlight on how its infrastructure and data assets are being priced.

BIPC's $30 billion semiconductor factory partnership with Intel in Arizona ($15 billion Brookfield share, BIPC equity contribution ~$500-750M) is the most concrete example of expanding the definition of infrastructure.

Mechanism: Intel operates the factory, while Brookfield provides the capital. In return, Brookfield receives a priority and protected return on the factory's cash flows.

Read the complete narrative.

Curious what sits behind that $57.14 fair value estimate and 18.6% discount call, according to composite32? The narrative leans heavily on cash flow growth, higher value data assets and a reassessment of how those earnings streams might be priced over time, but the exact assumptions are where the story really gets interesting.

Result: Fair Value of $57.14 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you still need to weigh risks such as execution on capital recycling and data center build outs, as well as any change in access to attractive project financing.

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

Another view on valuation

Not everyone sees Brookfield Infrastructure as undervalued. Our DCF model estimates fair value at $26.71 per share, compared with the current $46.50 price, which screens as overvalued. That is a very different message to the $57.14 narrative. Which lens do you trust more right now?

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

Next Steps

If this mix of views on Brookfield Infrastructure leaves you uncertain, take a moment now to review the full breakdown of risks and rewards through 1 key reward and 2 important warning signs and clarify your own stance.

Looking for more investment ideas?

If you are weighing what to do next after looking at Brookfield Infrastructure, do not stop here, broaden your watchlist and keep your options open.

• Target income potential with resilient payers by scanning 16 dividend fortresses and see which companies currently offer higher yields with an emphasis on stability.
• Hunt for value by reviewing 50 high quality undervalued stocks where companies with solid fundamentals and cheaper valuations are already filtered for you.
• Prioritise peace of mind by checking 63 resilient stocks with low risk scores so you can focus on businesses that currently screen with lower overall risk scores.

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.