Brookfield Infrastructure Partners LP

Brookfield Infrastructure Partners LP is assigned a 3-star quantitative star rating, indicating our belief that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a minor 1% discount to our quantitative fair value estimate of $36.02 per share; however, some caution is warranted due to this estimate's medium uncertainty rating.

The firm's favorable dividend structure increases our quantitative valuation. Dividends represent a stable form of future cash flows returned to shareholders, reducing the perceived risk of a business. Reflecting the firm's dividends is its forward dividend yield of 5.2%, which falls in the top 20% compared with peers globally. Expected dividend payments over the coming year relative to the current share price are favorable, which contributes to our view that shares are cheap.

Alternatively, the company's valuation metrics are potentially concerning. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's enterprise value to EBITDA ratio of 23.2, a core component of valuation, sits in the top 30% compared with global peers. This suggests that the value of its enterprise value, or the value of its shares and debt, is a high multiple of the generated EBITDA. Despite our favorable price/fair value ratio, this characteristic is a negative attribute.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. While we believe the stock is undervalued, this outperformance had a negative impact on our valuation estimate.

With its quantitative economic moat rating of none, this business is unlikely to consistently outearn its cost of capital without structural protection from competition. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.