QAN share price in focus
Founded in 1921, Qantas is Australia’s largest airline operator, with the biggest fleet, the most international flights, and the widest range of destinations.
The airline operates both domestic and international flights, offers freight services, and manages the popular frequent flyer loyalty program.
Additionally, Qantas owns Jetstar, giving it considerable pricing and market influence within the highly concentrated Australian airline industry.
FMG shares
Fortescue Ltd is an iron ore production and exploration company started by the well-known Australian polymath Andrew “Twiggy” Forrest. The company was founded in 2003 and has assets across the Pilbara region of Western Australia.
Fortescue’s main operation is iron ore production, shipping more than 190 million tonnes annually. However, Fortescue has also been ramping up exploration activities for materials like copper, rare earths, and lithium. This exploration covers countries including Australia, Argentina, Chile, Brazil, and Kazakhstan
This is all part of Fortescue’s long-term strategy to take advantage of the shift to renewable energy. Demand for copper, lithium, and other rare earths are expected to skyrocket with increasing battery and electric vehicle production and Fortescue intends to fill that demand.
QAN share price valuation
We would consider QAN to be a ‘mature’ or ‘blue-chip’ business, so some of the metrics that could be worth considering include the debt/equity ratio, average yield, and return on equity, or ROE. These measures give us a sense of the company’s debt levels, their ability to generate returns from their assets, and their ability to consistently return profits to shareholders.
For FY24, Qantas Airways Limited reported a debt/equity ratio of 2241.8%, meaning the company is leveraged (it has more debt than equity). This can increase risk so it’s important that a leveraged company is generating stable returns and has sufficient cash flow to pay interest on its debts.
Over the last 5 years, QAN has delivered an average dividend yield of 1.2% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, QAN reported an ROE of 823.0%. For a mature business you generally want to see an ROE of more than 10%, so QAN clears this hurdle.
In FY24, Fortescue Ltd reported a debt/equity ratio of 27.6%, meaning the company has more equity than debt.
As for dividends, since 2019 FMG has achieved an average dividend yield of 10.5% per year, and in FY24 reported an ROE of 30.2%
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.
