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.
A2M shares
Founded in New Zealand in 2000, The a2 Milk Company sells dairy products which contain the naturally occurring A2 protein type. Most other dairy products on the market contain the A1 protein, which is claimed to be harder to digest for some people.
The company is responsible mainly for distribution and marketing, with the production outsourced to suppliers who source from over 25 certified dairy farms across Australia. A large part of the a2 business is infant formula, which is produced by its supply partner Synlait Milk in New Zealand.
While the science is a little uncertain on why a2 milk might be easier to digest, randomised studies have repeatedly shown that it is an effective solution for many people who struggle with ‘normal’ dairy products.
DOW & A2M 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 A2M 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, A2M has increased revenue at a rate of 11.6% per year to hit $1,673m in FY24. Meanwhile, net profit has increased from $81m to $168m. A2M’s last reported ROE was 12.8%.
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 DOW or A2M shares. To learn more about valuation, check out one of our free online investing courses.
