Brookfield Business Partners (NYSE:BBU) and The Interpublic Group of Companies (NYSE:IPG) are both business services companies, but which is the better business? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.
Profitability
This table compares Brookfield Business Partners and The Interpublic Group of Companies' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Brookfield Business Partners | -0.43% | -1.66% | -0.33% |
| The Interpublic Group of Companies | 6.03% | 25.71% | 4.20% |
Dividends
Brookfield Business Partners pays an annual dividend of $0.25 per share and has a dividend yield of 0.6%. The Interpublic Group of Companies pays an annual dividend of $1.02 per share and has a dividend yield of 3.9%. Brookfield Business Partners pays out 40.3% of its earnings in the form of a dividend. The Interpublic Group of Companies pays out 52.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Interpublic Group of Companies has increased its dividend for 1 consecutive years. The Interpublic Group of Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a summary of current recommendations and price targets for Brookfield Business Partners and The Interpublic Group of Companies, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Brookfield Business Partners | 0 | 0 | 6 | 0 | 3.00 |
| The Interpublic Group of Companies | 0 | 2 | 6 | 0 | 2.75 |
Brookfield Business Partners currently has a consensus price target of $46.80, indicating a potential upside of 14.15%. The Interpublic Group of Companies has a consensus price target of $25.40, indicating a potential downside of 2.76%. Given Brookfield Business Partners' stronger consensus rating and higher probable upside, research analysts clearly believe Brookfield Business Partners is more favorable than The Interpublic Group of Companies.
Earnings and Valuation
This table compares Brookfield Business Partners and The Interpublic Group of Companies' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Brookfield Business Partners | $43.03 billion | 0.08 | $43 million | $0.62 | 66.13 |
| The Interpublic Group of Companies | $10.22 billion | 1.00 | $656 million | $1.93 | 13.53 |
The Interpublic Group of Companies has lower revenue, but higher earnings than Brookfield Business Partners. The Interpublic Group of Companies is trading at a lower price-to-earnings ratio than Brookfield Business Partners, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Brookfield Business Partners has a beta of 1.65, meaning that its share price is 65% more volatile than the S&P 500. Comparatively, The Interpublic Group of Companies has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.
Institutional and Insider Ownership
74.4% of Brookfield Business Partners shares are owned by institutional investors. Comparatively, 97.0% of The Interpublic Group of Companies shares are owned by institutional investors. 1.1% of The Interpublic Group of Companies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Summary
The Interpublic Group of Companies beats Brookfield Business Partners on 11 of the 16 factors compared between the two stocks.
