A2M share price in focus
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.
TCL shares
Transurban, founded in 1999, manages and develops urban toll road networks in Australia, Canada and the United States.
Transurban has an interest in 22 urban motorways across its portfolio. Some of its notable motorways include the CityLink in Melbourne, Hills M2 in Sydney and the Logan Motorway in Brisbane.
Transurban invests heavily in the development of new projects which are paid back through collecting toll revenue from motor vehicles.
A2M & TCL share price valuation
As a growth company, one way to put a broad projection on the A2M share price could be to compare its price-to-sales multiple over time. This can tell us how the company has historically been valued relative to its total revenue.
Currently, A2 Milk Company Ltd shares have a price-sales ratio of 3.02x, compared to its 5-year average of 3.44x, meaning its shares are trading lower than their historical average. This could mean that the share price has fallen, or sales have increased, or both. In the case of A2M, revenue has been growing over the last 3 years. Of course, context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric, but this can be a rough starting point.
Since TCL is more of a ‘blue chip’ company, we could look at its dividend yield to determine its value. If we compare it to the historical dividend yield, we can get a sense of the stability of the company and its ability to pay out income. TCL is offering a trailing dividend yield of around 4.79%, which compares to its 5-year average of 3.64%. This is just one of many ways you could put a value on TCL shares. The Rask websites offer free online investing courses, created by analysts explaining valuation methods like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets which can help you learn how to value a company like A2M or TCL.
