COH share price in focus
Cochlear, established in 1981 in Sydney, is a leading medical device company specializing in hearing solutions. The company designs, manufactures, and distributes three types of hearing implants tailored to various medical needs.
As a global leader in hearing technology, Cochlear has delivered over 750,000 implantable devices and employs more than 5,000 people across 50+ countries.
Its mission is to enhance the quality of life for individuals living with hearing-related conditions.
WES shares
Wesfarmers is a diversified Australian conglomerate headquartered in Perth. It’s essentially a listed investment company with outright ownership or significant stakes in companies across retail, chemical, fertiliser, industrial and safety brands and products.
Wesfarmers has a long history of buying businesses, re-investing in them to grow cash flow and assets, then selling them off for a higher price. A good example of this is Coles Group, which it bought in 2007 and spun out in 2018. However, by far (over 50%) of the company’s operating profit comes from Bunnings Warehouse, the #1 hardware and home improvement business in Australia (and the country’s most trusted brand in 2023 & 2024). Wesfarmers originally bought into Bunnings in 1987, buying the final 52% in 1994 for $594 million.
Other household names owned by Wesfarmers include Blackwoods, Kmart, Target, Officeworks, and Priceline Pharmacy. Wesfarmers has been a leading blue chip stock on the ASX for decades and is known for paying a consistent dividend.
COH & WES share price valuation
As a growth company, some of the trends we might investigate from COH 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, COH has grown revenue at a rate of 14.3% per year to reach $2,236m in FY24. Over the same stretch of time, net profit has increased from $324m to $357m. COH last reported a ROE of 19.9%.
Since WES is more of a ‘mature’ or ‘blue-chip’ business, some of the metrics that could be considered important include the debt/equity ratio, average yield, and return on equity, or ROE. These are useful as they give us an idea of debt levels and the company’s ability to generate a return on assets and pay out profits (which is what we want from a blue chip). In FY24, Wesfarmers Ltd reported a debt/equity ratio of 131.4%, meaning the company is leveraged (it has more debt than equity). Higher debt levels come with increased risk so it’s important that a leveraged company has stable returns and the capacity to pay interest on its debts.
As for dividends, since 2019 WES has achieved an average dividend yield of 3.4% per year.
Finally, in FY24, WES reported an ROE of 30.3%. For a mature business you’re generally looking for an ROE of more than 10%, so WES clears this hurdle.
Keep in mind that these are only a small selection of metrics. We don’t have 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.
