DOW share price in focus
Downer is the leading provider of integrated infrastructure services in Australia and New Zealand. They’re responsible for building, maintaining, and operating transit systems, utilities services, and public infrastructure.
While the name might not be familiar, you’ve definitely come across their work. Downer operate services like the Yarra Trams in Melbourne, and build the passenger trains you see in most states.
Downer separates its business into three main segments of Transport, Utilities, and Facilities. Transport delivers a little over 50% of their revenue, and Utilities and Facilities around 20% and 30% respectively.
RMD shares
Founded in 1989 by Peter Farrell in Australia, ResMed is now headquartered in San Diego, California. The company specializes in medical equipment, offering cloud-connectable continuous positive airway pressure (CPAP) machines to treat obstructive sleep apnea (OSA). Although ResMed is based in the US, its shares are listed on both the NYSE and the ASX.
With over 10,000 employees and operations in more than 140 countries, ResMed has two main business units: Sleep and Respiratory Care, and Software as a Service (SaaS). In the Sleep and Respiratory Care unit, ResMed provides top-of-the-line CPAP machines for sleep apnea, along with non-invasive and invasive ventilation solutions for life-support patients. In the SaaS unit, the company offers software that supports durable medical equipment (DME/HME), which plays a key role in out-of-hospital care.
ResMed’s extensive digital health network, powered by its cloud-connected devices, enables the company to use its industry-leading hardware (such as masks and humidifiers) and SaaS data to generate valuable insights, enhance patient outcomes, and lower overall healthcare costs.
DOW share price valuation
One way to have a ‘quick read’ of where the DOW share price is could be to study something like dividend yield over time. This can give us a sense of the stability of the company and whether they can consistently pay out a percentage of profits.
Remember, the dividend yield is basically the ‘cash flow’ to a shareholder, but it can fluctuate year-to-year or between payments. Currently, Downer EDI Ltd shares have a dividend yield of around 3.18%, compared to its 5-year average of 3.74%. In other words, DOW shares are trading lower than their historical average dividend yield. Be careful how you interpret this information though – it could mean that dividends have fallen, or that the share price is increasing, or both. In the case of DOW, we can see that last year’s dividend was less than the 3-year average, so the dividend has been falling.
Since RMD is more of a ‘growth’ company than an established blue chip, a price-sales ratio might be a more appropriate assessment. This ratio gives us an idea of how the company has historically been valued relative to its earnings, which can indicate if the company is over or undervalued today. The RMD share price currently trades at a price-sales ratio of 4.81x, which compares to its 5-year long-term average of 8.70x. So, RMD shares are trading lower than their historical average. Don’t forget, a simple multiple like this should only be the start of your research. The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! It’s a good idea to use multiple valuation methods to value a share like Resmed CDI.
