The A2 Milk Company Ltd (ASX:A2M) share price is up 14.6% since the start of 2024. Meanwhile, the Aristocrat Leisure Limited (ASX:ALL) share price is 3.2% away from its 52-week high.
A2M share price in focus
Founded in New Zealand in 2000, The a2 Milk Company specialises in dairy products that contain the naturally occurring A2 protein type, sold under the a2 brand.
The company does not produce its products directly but partners with over 25 certified dairy farms across Australia, where suppliers handle the production. Additionally, its instant formula products are manufactured by its supply partner, Synlait Milk, in New Zealand.
A key selling point of a2 Milk is its claimed health benefits, particularly its easier digestibility compared to regular milk. This makes it a suitable option for people who typically experience digestive issues with standard milk.
ALL shares
Aristocrat Leisure is an Australian gambling machine operator headquartered in Sydney. It was founded by Len Ainsworth in 1953
Today, Aristocrat is the largest gambling machine manufacturer in Australia and one of the largest manufacturers of slot machines in the world. However, the business has diversified over the years and now also makes online mobile games. This segment has grown steadily to now make up nearly half of the company’s revenue.
The gaming machines Aristocrat make can be sold outright to a venue or gaming operator. Alternatively, a machine can be installed with a proportion of the revenue generated being paid on a recurring basis back to Aristocrat.
A2M share price valuation
As a growth company, some of the trends we might investigate from A2M 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, A2M has grown revenue at a rate of 11.6% per year to reach $1,673m in FY24. Over the same stretch of time, net profit has increased from $81m to $168m. A2M last reported a ROE of 12.8%.
Over the last 3 years, ALL has increased revenue at a rate of 11.0% per year to hit $6,485m in FY24. Meanwhile, net profit has increased from $1,378m to $1,512m. ALL’s last reported ROE was 22.8%.
Please keep in mind that context is important – these metrics give us some indication of company performance, but it’s just the start of valuing A2M or ALL shares. To learn more about valuation, check out one of our free online investing courses.
