DOW share price in focus
Downer is the leading provider of integrated infrastructure services across Australia and New Zealand, specialising in the construction, maintenance, and operation of transit systems, utility services, and public infrastructure.
While the name might not instantly recognisable, their work is highly visible. For instance, Downer operates Melbourne’s Yarra Trams and manufactures the passenger trains you see in most states.
The company’s operations are divided into three primary segments: Transport, Utilities, and Facilities. The Transport division accounts for just over 50% of Downer’s revenue, with Utilities and Facilities contributing approximately 20% and 30% respectively.
RMD shares
ResMed is a medical equipment company based in San Diego, California, but originally founded in Australia by Peter Farrell. The company provides cloud-connectable continuous positive airway pressure, or CPAP, machines for the treatment of obstructive sleep apnea (OSA). ResMed shares a listed both on the NYSE and the ASX. Because the primary listing is in the US, the market announcements and reports might look a bit different to other Australian companies as they follow the US format.
ResMed is a global company with 10,000+ employees and a presence in over 140 countries. It has two primary business units: Sleep and Respiratory Care, and Software as a Service (SaaS). The industry-leading CPAP machines for sleep apnea are provided under the Sleep and Respiratory Care business. This covers patients ranging from those who only require therapy from CPAP systems at night to those who are dependent on non-invasive or invasive ventilation for life-support. Within the SaaS unit ResMed provides software that assists durable or home medical equipment (DME/HME). Basically, it assists in out-of-hospital care.
ResMed leverages its industry-leading hardware (e.g. masks and humidifiers) and its SaaS data to drive insights, improve outcomes and reduce overall healthcare costs.
DOW share price valuation
We would consider DOW 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, Downer EDI Ltd reported a debt/equity ratio of 81.1%, meaning the company has more equity than debt.
Over the last 5 years, DOW has delivered an average dividend yield of 3.7% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, DOW reported an ROE of 3.6%. For a mature business you generally want to see an ROE of more than 10%, so DOW’s returns are a bit less than what we’d expect.
As a growth company, some of the trends we might consider from RMD shares include revenue growth, profit growth, and return on equity (ROE). I say ‘trends’ because it’s always important to look at these figures over a few years. The trend is much more valuable info than a single measure at one point in time.
Over the last 3 years, RMD has increased revenue at a rate of 13.6% per year to hit $4,685m in FY24. Meanwhile, net profit has increased from $475m to $1,021m. RMD’s last reported ROE was 22.7%.
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 DOW or RMD shares. To learn more about valuation, check out one of our free online investing courses.
