Intrinsic value of Brookfield Business Partners - BBU

Previous Close

$40.48

  Intrinsic Value

$420.42

stock screener

  Rating & Target

str. buy

+939%

Previous close

$40.48

 
Intrinsic value

$420.42

 
Up/down potential

+939%

 
Rating

str. buy

We calculate the intrinsic value of BBU stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  36,517
  56,418
  84,374
  122,422
  172,720
  237,450
  318,727
  418,509
  538,520
  680,194
  844,647
  1,032,662
  1,244,705
  1,480,953
  1,741,338
  2,025,594
  2,333,314
  2,664,002
  3,017,121
  3,392,140
  3,788,569
  4,205,996
  4,644,102
  5,102,690
  5,581,687
  6,081,161
  6,601,319
  7,142,510
  7,705,227
  8,290,097
Variable operating expenses, $m
  35,690
  54,888
  81,855
  118,557
  167,076
  229,517
  307,920
  404,173
  519,940
  656,604
  814,776
  996,141
  1,200,685
  1,428,579
  1,679,755
  1,953,958
  2,250,796
  2,569,789
  2,910,419
  3,272,175
  3,654,585
  4,057,249
  4,479,862
  4,922,231
  5,384,288
  5,866,098
  6,367,860
  6,889,912
  7,432,728
  7,996,914
Fixed operating expenses, $m
  101
  103
  106
  108
  110
  113
  115
  118
  120
  123
  126
  129
  131
  134
  137
  140
  143
  146
  150
  153
  156
  160
  163
  167
  171
  174
  178
  182
  186
  190
Total operating expenses, $m
  35,791
  54,991
  81,961
  118,665
  167,186
  229,630
  308,035
  404,291
  520,060
  656,727
  814,902
  996,270
  1,200,816
  1,428,713
  1,679,892
  1,954,098
  2,250,939
  2,569,935
  2,910,569
  3,272,328
  3,654,741
  4,057,409
  4,480,025
  4,922,398
  5,384,459
  5,866,272
  6,368,038
  6,890,094
  7,432,914
  7,997,104
Operating income, $m
  725
  1,427
  2,413
  3,757
  5,533
  7,820
  10,692
  14,218
  18,460
  23,467
  29,746
  36,392
  43,888
  52,240
  61,446
  71,496
  82,375
  94,067
  106,552
  119,811
  133,828
  148,587
  164,077
  180,292
  197,228
  214,888
  233,280
  252,416
  272,312
  292,993
EBITDA, $m
  2,056
  3,229
  4,878
  7,123
  10,091
  13,912
  18,710
  24,602
  31,687
  40,053
  49,764
  60,866
  73,388
  87,339
  102,716
  119,502
  137,675
  157,204
  178,058
  200,205
  223,617
  248,269
  274,143
  301,226
  329,514
  359,012
  389,731
  421,693
  454,926
  489,468
Interest expense (income), $m
  0
  274
  918
  1,854
  3,168
  4,956
  7,320
  10,363
  14,183
  18,873
  24,514
  31,173
  38,903
  47,740
  57,706
  68,811
  81,050
  94,410
  108,874
  124,417
  141,015
  158,642
  177,275
  196,895
  217,488
  239,042
  261,557
  285,033
  309,482
  334,920
  361,369
Earnings before tax, $m
  451
  509
  560
  589
  577
  500
  329
  35
  -413
  -1,046
  -1,427
  -2,511
  -3,852
  -5,466
  -7,365
  -9,554
  -12,035
  -14,807
  -17,865
  -21,204
  -24,814
  -28,688
  -32,818
  -37,196
  -41,814
  -46,668
  -51,753
  -57,066
  -62,607
  -68,376
Tax expense, $m
  122
  137
  151
  159
  156
  135
  89
  9
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  329
  371
  409
  430
  421
  365
  240
  26
  -413
  -1,046
  -1,427
  -2,511
  -3,852
  -5,466
  -7,365
  -9,554
  -12,035
  -14,807
  -17,865
  -21,204
  -24,814
  -28,688
  -32,818
  -37,196
  -41,814
  -46,668
  -51,753
  -57,066
  -62,607
  -68,376

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  25,289
  39,071
  58,431
  84,780
  119,612
  164,439
  220,725
  289,826
  372,936
  471,049
  584,936
  715,140
  861,984
  1,025,591
  1,205,913
  1,402,766
  1,615,869
  1,844,877
  2,089,419
  2,349,127
  2,623,663
  2,912,739
  3,216,137
  3,533,719
  3,865,434
  4,211,330
  4,571,550
  4,946,337
  5,336,029
  5,741,065
Adjusted assets (=assets-cash), $m
  25,289
  39,071
  58,431
  84,780
  119,612
  164,439
  220,725
  289,826
  372,936
  471,049
  584,936
  715,140
  861,984
  1,025,591
  1,205,913
  1,402,766
  1,615,869
  1,844,877
  2,089,419
  2,349,127
  2,623,663
  2,912,739
  3,216,137
  3,533,719
  3,865,434
  4,211,330
  4,571,550
  4,946,337
  5,336,029
  5,741,065
Revenue / Adjusted assets
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
  1.444
Average production assets, $m
  8,654
  13,371
  19,997
  29,014
  40,935
  56,276
  75,538
  99,187
  127,629
  161,206
  200,181
  244,741
  294,995
  350,986
  412,697
  480,066
  552,995
  631,368
  715,058
  803,937
  897,891
  996,821
  1,100,652
  1,209,337
  1,322,860
  1,441,235
  1,564,513
  1,692,775
  1,826,139
  1,964,753
Working capital, $m
  -7,303
  -11,284
  -16,875
  -24,484
  -34,544
  -47,490
  -63,745
  -83,702
  -107,704
  -136,039
  -168,929
  -206,532
  -248,941
  -296,191
  -348,268
  -405,119
  -466,663
  -532,800
  -603,424
  -678,428
  -757,714
  -841,199
  -928,820
  -1,020,538
  -1,116,337
  -1,216,232
  -1,320,264
  -1,428,502
  -1,541,045
  -1,658,019
Total debt, $m
  10,932
  22,068
  37,711
  59,001
  87,146
  123,366
  168,845
  224,679
  291,831
  371,106
  463,127
  568,332
  686,982
  819,176
  964,876
  1,123,934
  1,296,121
  1,481,159
  1,678,750
  1,888,594
  2,110,419
  2,343,992
  2,589,138
  2,845,744
  3,113,770
  3,393,254
  3,684,312
  3,987,139
  4,302,011
  4,629,279
Total liabilities, $m
  20,433
  31,569
  47,212
  68,502
  96,647
  132,867
  178,346
  234,180
  301,332
  380,607
  472,628
  577,833
  696,483
  828,677
  974,377
  1,133,435
  1,305,622
  1,490,660
  1,688,251
  1,898,095
  2,119,920
  2,353,493
  2,598,639
  2,855,245
  3,123,271
  3,402,755
  3,693,813
  3,996,640
  4,311,512
  4,638,780
Total equity, $m
  4,855
  7,502
  11,219
  16,278
  22,966
  31,572
  42,379
  55,647
  71,604
  90,441
  112,308
  137,307
  165,501
  196,913
  231,535
  269,331
  310,247
  354,216
  401,168
  451,032
  503,743
  559,246
  617,498
  678,474
  742,163
  808,575
  877,738
  949,697
  1,024,518
  1,102,284
Total liabilities and equity, $m
  25,288
  39,071
  58,431
  84,780
  119,613
  164,439
  220,725
  289,827
  372,936
  471,048
  584,936
  715,140
  861,984
  1,025,590
  1,205,912
  1,402,766
  1,615,869
  1,844,876
  2,089,419
  2,349,127
  2,623,663
  2,912,739
  3,216,137
  3,533,719
  3,865,434
  4,211,330
  4,571,551
  4,946,337
  5,336,030
  5,741,064
Debt-to-equity ratio
  2.250
  2.940
  3.360
  3.620
  3.790
  3.910
  3.980
  4.040
  4.080
  4.100
  4.120
  4.140
  4.150
  4.160
  4.170
  4.170
  4.180
  4.180
  4.180
  4.190
  4.190
  4.190
  4.190
  4.190
  4.200
  4.200
  4.200
  4.200
  4.200
  4.200
Adjusted equity ratio
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  329
  371
  409
  430
  421
  365
  240
  26
  -413
  -1,046
  -1,427
  -2,511
  -3,852
  -5,466
  -7,365
  -9,554
  -12,035
  -14,807
  -17,865
  -21,204
  -24,814
  -28,688
  -32,818
  -37,196
  -41,814
  -46,668
  -51,753
  -57,066
  -62,607
  -68,376
Depreciation, amort., depletion, $m
  1,330
  1,802
  2,464
  3,366
  4,558
  6,092
  8,019
  10,383
  13,228
  16,585
  20,018
  24,474
  29,500
  35,099
  41,270
  48,007
  55,300
  63,137
  71,506
  80,394
  89,789
  99,682
  110,065
  120,934
  132,286
  144,124
  156,451
  169,277
  182,614
  196,475
Funds from operations, $m
  1,660
  2,173
  2,873
  3,796
  4,979
  6,457
  8,259
  10,409
  12,814
  15,539
  18,591
  21,963
  25,648
  29,632
  33,905
  38,453
  43,264
  48,330
  53,640
  59,190
  64,975
  70,994
  77,247
  83,738
  90,472
  97,455
  104,698
  112,211
  120,007
  128,099
Change in working capital, $m
  -2,739
  -3,980
  -5,591
  -7,610
  -10,060
  -12,946
  -16,255
  -19,956
  -24,002
  -28,335
  -32,891
  -37,603
  -42,409
  -47,250
  -52,077
  -56,851
  -61,544
  -66,138
  -70,624
  -75,004
  -79,286
  -83,485
  -87,621
  -91,717
  -95,799
  -99,895
  -104,032
  -108,238
  -112,543
  -116,974
Cash from operations, $m
  4,398
  6,154
  8,464
  11,406
  15,039
  19,403
  24,514
  30,366
  36,817
  43,874
  51,481
  59,566
  68,056
  76,882
  85,982
  95,304
  104,809
  114,467
  124,264
  134,194
  144,261
  154,479
  164,869
  175,455
  186,271
  197,350
  208,730
  220,449
  232,550
  245,073
Maintenance CAPEX, $m
  -540
  -865
  -1,337
  -2,000
  -2,901
  -4,093
  -5,628
  -7,554
  -9,919
  -12,763
  -16,121
  -20,018
  -24,474
  -29,500
  -35,099
  -41,270
  -48,007
  -55,300
  -63,137
  -71,506
  -80,394
  -89,789
  -99,682
  -110,065
  -120,934
  -132,286
  -144,124
  -156,451
  -169,277
  -182,614
New CAPEX, $m
  -3,256
  -4,717
  -6,625
  -9,017
  -11,921
  -15,341
  -19,263
  -23,648
  -28,442
  -33,577
  -38,975
  -44,560
  -50,254
  -55,991
  -61,711
  -67,369
  -72,930
  -78,373
  -83,689
  -88,879
  -93,954
  -98,930
  -103,831
  -108,685
  -113,522
  -118,375
  -123,277
  -128,262
  -133,364
  -138,614
Cash from investing activities, $m
  -3,796
  -5,582
  -7,962
  -11,017
  -14,822
  -19,434
  -24,891
  -31,202
  -38,361
  -46,340
  -55,096
  -64,578
  -74,728
  -85,491
  -96,810
  -108,639
  -120,937
  -133,673
  -146,826
  -160,385
  -174,348
  -188,719
  -203,513
  -218,750
  -234,456
  -250,661
  -267,401
  -284,713
  -302,641
  -321,228
Free cash flow, $m
  603
  571
  502
  389
  217
  -31
  -376
  -837
  -1,545
  -2,466
  -3,615
  -5,011
  -6,672
  -8,608
  -10,828
  -13,334
  -16,128
  -19,205
  -22,562
  -26,191
  -30,086
  -34,240
  -38,645
  -43,295
  -48,185
  -53,311
  -58,671
  -64,264
  -70,091
  -76,155
Issuance/(repayment) of debt, $m
  7,667
  11,136
  15,643
  21,290
  28,144
  36,220
  45,479
  55,834
  67,153
  79,275
  92,021
  105,205
  118,650
  132,194
  145,700
  159,057
  172,187
  185,039
  197,590
  209,844
  221,825
  233,574
  245,146
  256,606
  268,026
  279,484
  291,058
  302,827
  314,872
  327,268
Issuance/(repurchase) of shares, $m
  1,488
  2,275
  3,308
  4,629
  6,267
  8,242
  10,567
  13,242
  16,370
  19,884
  23,294
  27,510
  32,046
  36,879
  41,987
  47,350
  52,951
  58,777
  64,817
  71,067
  77,525
  84,191
  91,070
  98,171
  105,504
  113,080
  120,915
  129,025
  137,428
  146,143
Cash from financing (excl. dividends), $m  
  9,155
  13,411
  18,951
  25,919
  34,411
  44,462
  56,046
  69,076
  83,523
  99,159
  115,315
  132,715
  150,696
  169,073
  187,687
  206,407
  225,138
  243,816
  262,407
  280,911
  299,350
  317,765
  336,216
  354,777
  373,530
  392,564
  411,973
  431,852
  452,300
  473,411
Total cash flow (excl. dividends), $m
  9,758
  13,982
  19,453
  26,308
  34,628
  44,431
  55,670
  68,239
  81,978
  96,693
  111,700
  127,704
  144,024
  160,465
  176,859
  193,073
  209,010
  224,610
  239,846
  254,720
  269,263
  283,525
  297,571
  311,482
  325,345
  339,253
  353,302
  367,589
  382,209
  397,256
Retained Cash Flow (-), $m
  -1,817
  -2,646
  -3,717
  -5,059
  -6,688
  -8,607
  -10,807
  -13,267
  -16,370
  -19,884
  -23,294
  -27,510
  -32,046
  -36,879
  -41,987
  -47,350
  -52,951
  -58,777
  -64,817
  -71,067
  -77,525
  -84,191
  -91,070
  -98,171
  -105,504
  -113,080
  -120,915
  -129,025
  -137,428
  -146,143
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  7,940
  11,336
  15,736
  21,249
  27,940
  35,824
  44,863
  54,971
  65,608
  76,809
  88,406
  100,194
  111,978
  123,586
  134,872
  145,723
  156,059
  165,833
  175,028
  183,653
  191,739
  199,334
  206,501
  213,311
  219,841
  226,173
  232,387
  238,563
  244,780
  251,113
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  7,613
  10,378
  13,694
  17,496
  21,657
  25,999
  30,309
  34,358
  37,688
  40,268
  41,983
  42,756
  42,576
  41,490
  39,596
  37,031
  33,956
  30,540
  26,949
  23,337
  19,832
  16,539
  13,534
  10,864
  8,552
  6,599
  4,988
  3,691
  2,672
  1,891
Current shareholders' claim on cash, %
  58.8
  35.2
  21.6
  13.6
  8.8
  5.8
  3.9
  2.7
  1.9
  1.4
  1.0
  0.7
  0.6
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Brookfield Business Partners L.P. seeks returns of at least 15% on its investments. Brookfield Business Partners L.P. is based in Hamilton, Bermuda. Brookfield Business Partners L.P. operates as a subsidiary of Brookfield Asset Management Inc.

FINANCIAL RATIOS  of  Brookfield Business Partners (BBU)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BBU stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BBU stock intrinsic value calculation we used $22823 million for the last fiscal year's total revenue generated by Brookfield Business Partners. The default revenue input number comes from 2017 income statement of Brookfield Business Partners. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BBU stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BBU is calculated based on our internal credit rating of Brookfield Business Partners, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Brookfield Business Partners.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BBU stock the variable cost ratio is equal to 98.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $99 million in the base year in the intrinsic value calculation for BBU stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 8.4% for Brookfield Business Partners.

Corporate tax rate of 27% is the nominal tax rate for Brookfield Business Partners. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BBU stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BBU are equal to 23.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Brookfield Business Partners operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BBU is equal to -20%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3038 million for Brookfield Business Partners - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 52 million for Brookfield Business Partners is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Brookfield Business Partners at the current share price and the inputted number of shares is $2.1 billion.

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COMPANY NEWS

▶ Brookfield Business Partners LP to Host Earnings Call   [Aug-03-18 07:00AM  ACCESSWIRE]
▶ Westinghouse Sale to Brookfield Complete   [Aug-01-18 04:15PM  Business Wire]
▶ Brookfield Business Partners LP to Host Earnings Call   [May-07-18 08:15AM  ACCESSWIRE]
▶ [$$] Judge Approves Brookfield's $4.6 Billion Deal for Westinghouse   [Mar-27-18 04:17PM  The Wall Street Journal]
▶ Brookfield Business Partners Completes Annual Filings   [Mar-09-18 05:55PM  GlobeNewswire]
▶ BGIS provides update on UK transaction   [Mar-08-18 08:12AM  GlobeNewswire]
▶ BGIS Appoints Peter Poolsaar to Chief Information Officer   [Feb-20-18 09:56AM  GlobeNewswire]
▶ BGIS recognized as a 2018 Military Friendly® Employer   [Jan-09-18 12:00PM  GlobeNewswire]
▶ Westinghouse to be acquired for $4.6B   [10:55AM  American City Business Journals]
▶ Brookfield Business Partners LP to Host Earnings Call   [Nov-06-17 06:55AM  ACCESSWIRE]
▶ BGIS named as one of Canadas Safest Employers   [Oct-25-17 09:00AM  GlobeNewswire]
▶ Stocks With Rising Relative Strength: Granite Construction   [Sep-13-17 03:00AM  Investor's Business Daily]
▶ Mastec Earns IBD Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ KBR Clears Technical Benchmark, Hitting 80-Plus RS Rating   [Sep-07-17 03:00AM  Investor's Business Daily]
▶ Stocks Showing Improved Relative Strength: Mastec   [Aug-30-17 03:00AM  Investor's Business Daily]
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