CSL share price in focus
Previously a government body, CSL is today a publicly-listed global biotechnology company that develops and delivers innovative medicines that save lives, protect public health, and help people with life-threatening medical conditions live full lives.
The company is divided into three core business units: CSL Behring, CSL Seqirus and CSL Vifor. Behring, acquired in 2004, manufactures and distributes blood plasma products. Seqirus is responsible for making flu-related products and performs pandemic-related services for governments. Finally, Vifor makes products for iron deficiency and nephrology (renal/kidney care).
CSL has developed a strong reputation with Australian investors over many decades as being a reliable company and a consistent dividend payer. With the continual rise in healthcare costs and the consistent historical performance, interest in CSL shares remains high today.
PME shares
Founded in 1983, Pro Medicus is a provider of radiology IT software serving hospitals, imaging centres and healthcare groups worldwide.
The company’s suite of products focuses on Radiology Information Systems (RIS), Picture Archiving and Communication Systems (PACS), and advanced visualization solutions. These tools support various functions, from patient scheduling and billing to rapid medical imaging interpretation and analysis.
CSL & PME share price valuation
One way to have a ‘quick read’ of where the CSL 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, CSL Ltd shares have a dividend yield of around 1.56%, compared to its 5-year average of 1.50%. In other words, CSL shares are trading higher than their historical average dividend yield. Be careful how you interpret this information though – it could mean that dividends are growing, or it could mean the share price is falling, or both. In the case of CSL, the annual report shows last year’s dividend was greater than the 3-year average, so the dividend has been growing.
Since PME 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 PME share price currently trades at a price-sales ratio of 122.75x, which compares to its 5-year long-term average of 82.69x. So, its shares are trading above 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 Pro Medicus Ltd.
