Key Points
Brookfield Corporation focuses on plan value per share, its estimate of the long-term intrinsic value of its assets.
Management is aiming for annual intrinsic value growth of more than 15%.
Execution is the real driver.
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Most investors focus on earnings or asset value when valuing a stock. Brookfield Corporation (NYSE: BN) wants you to focus on something else.
It tracks a metric called plan value per share, which is its estimate of the business's value based primarily on long-term cash flows. That metric doesn't necessarily move much in any single quarter, but over time, it can offer a better picture of how the company is really performing.
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The idea is simple: If Brookfield grows its plan value, its share price will follow that over time.
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A different way to think about Brookfield Corporation's stock value
Brookfield's unique approach to valuing its stock reflects how it runs the business. Instead of managing for short-term results, it focuses on building long-duration cash flows across infrastructure, renewable energy, and private investments. It also continues to expand its insurance platform, which now manages more than $100 billion in assets.
All of these pieces feed into plan value per share. In simple terms, it's Brookfield's way of answering a straightforward question: What is the business worth if it continues to execute over time?
The growth target -- and the track record
Brookfield has set a clear objective: Grow intrinsic value at more than 15% per year. More precisely, the company aims to grow its plan value from $68 to $140 from 2025 to 2030.
That's not just an aspirational number. Over the past five years, the company reports that its plan value per share has grown at roughly 16% annually (from $32 to $67). That track record matters. It suggests that the model has already worked, giving the company credibility for repeating that performance in the future.
In other words, Brookfield isn't just projecting something new; it's still doing what it has done before.
What needs to go right for the company?
For Brookfield to achieve its goal, it has to continue executing at a high level. That means it needs to keep growing its fee-related earnings, continue allocating capital effectively, and manage its insurance business with discipline.
None of these is a simple task, especially with the ongoing changes in external environments. But these are also areas where the company has built experience over time, so the management team is not building castles in thin air.
What does that mean for investors?
Compounding does not always feel dramatic in the short term, but it becomes powerful over time. At a 15% annual growth rate, intrinsic value would roughly double in about five years.
That does not mean the stock will follow the same path quarter to quarter. Market prices can move unpredictably. But over longer periods, they tend to track the business's underlying performance.
For perspective, Brookfield Corporation's stock price has delivered a 19% annualized return over the past 30 years, suggesting that the business model is working.
If Brookfield continues to grow its plan value per share at a similar pace, it will be a matter of time before the stock price doubles from here.
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Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Brookfield Corporation. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
