NWL share price in focus
Netwealth is a wealth management software business that provides a platform for financial planners to manage client money.
As of 2024, Netwealth has over 140,000 account holders on its platform and over $88 billion of funds under administration (FUA), making it a major industry player.
Netwealth’s big advantage is its scale and the user-friendly interface offered through the online platform. Through one central dashboard, users can buy and sell investments, track performance, and view account summaries, reports and tax statements.
While it may be large, Netwealth Group Ltd is a growth stock, and so it requires a different set of rules and may not be straightforward to value at times. Studies have shown that over 5-10+ years, it’s top-line revenue growth which explains a stock’s performance. That’s why it’s good to see Netwealth Group Ltd is able to grow revenue at 20.8% per year, a strong clip.
SOL shares
Washington H. Soul Pattinson (WHSP) is a diversified investment company with a portfolio of assets across a range of industries and asset classes.
Some of SOL’s largest holdings include stakes in other well-known publicly listed companies such as TPG Telecom (ASX: TPG), New Hope Group (ASX: NHC) and a cross-shareholding in Brickworks (ASX: BKW).
SOL’s aim is to deliver superior returns to its shareholders by creating capital growth and steadily increasing dividends as a holding company. As the second-oldest publicly listed company on the ASX it has developed a strong track record of doing just that. In fact, SOL has never missed a dividend payment since listing in 1903! It could best be thought of as a family-run LIC with directors that are financially aligned with shareholders.
NWL share price valuation
As a growth company, some of the trends we might investigate from NWL include revenue growth, profit growth, and return on equity (ROE). These measures can indicate the growth rates and prospects of the company, as well as their ability to generate returns from their assets.
Since 2021, NWL has grown revenue at a rate of 20.8% per year to reach $255m in FY24. Over the same stretch of time, net profit has increased from $54m to $83m. NWL last reported a ROE of 62.3%.
Since SOL is more of a ‘mature’ or ‘blue-chip’ business, some of the metrics that could be considered important include the debt/equity ratio, average yield, and return on equity, or ROE. These are useful as they give us an idea of debt levels and the company’s ability to generate a return on assets and pay out profits (which is what we want from a blue chip). In FY24, Washington H Soul Pattinson & Company Ltd reported a debt/equity ratio of 8.5%, meaning the company has more equity than debt.
As for dividends, since 2019 SOL has achieved an average dividend yield of 2.4% per year.
Finally, in FY24, SOL reported an ROE of 5.6%. For a mature business you’re generally looking for an ROE of more than 10%, so SOL’s returns are a bit less than what we’d expect.
It’s important to keep in mind that these are only a small selection of metrics and don’t give us enough information to value the business or make an investment decision. To learn more about valuation, check out one of our free online investing courses.
