TCL share price in focus
Founded in 1999, Transurban specializes in managing and developing urban toll road networks across Australia, Canada, and the United States.
The company holds interests in 22 urban motorways within its portfolio, including prominent routes such as CityLink in Melbourne, the Hills M2 in Sydney, and the Logan Motorway in Brisbane.
Transurban invests heavily in the development of new infrastructure projects, funding them through toll revenue collected from motor vehicles.
FMG shares
Fortescue Ltd, founded in 2003 and headquartered in Perth, is a leading iron ore production and exploration company with assets located in the Pilbara region of Western Australia.
The company primarily focuses on iron ore production, shipping over 190 million tonnes annually. In addition to its iron ore operations, Fortescue has been expanding its exploration efforts across Australia, Argentina, Chile, Brazil, and Kazakhstan, targeting key materials such as copper, rare earths, and lithium.
This expansion aligns with the company’s long-term strategy to capitalise on the growing demand for these resources, driven by the global shift to renewable energy. Fortescue aims to meet the increasing need for copper, lithium, and other rare earths in the coming years.
TCL & FMG share price valuation
We would consider TCL 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, Transurban Group reported a debt/equity ratio of 175.1%, meaning the company is leveraged (it has more debt than equity). This can increase risk so it’s important that a leveraged company is generating stable returns and has sufficient cash flow to pay interest on its debts.
Over the last 5 years, TCL has delivered an average dividend yield of 3.6% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, TCL reported an ROE of 3.0%. For a mature business you generally want to see an ROE of more than 10%, so TCL’s returns are a bit less than what we’d expect.
As for Fortescue Ltd, they reported a debt/equity ratio of 27.6% in FY24, meaning the company has more equity than debt.
Since 2019 FMG has achieved an average dividend yield of 10.5% per year, and in FY24 reported an ROE of 30.2%
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.
