CSL share price in focus
CSL is a global biotechnology company that creates and delivers life-saving medicines, aiming to protect public health and improve the quality of life for those with life-threatening conditions.
The company operates through three main divisions: CSL Behring, CSL Seqirus, and CSL Vifor. Behring, acquired in 2004, focuses on manufacturing and distributing blood plasma products. Seqirus, formed from the rebranding of BioCSL and the acquisition of Novartis’ flu business in 2015, develops flu-related products and provides pandemic-related services to governments. Vifor specializes in products for iron deficiency and nephrology (renal/kidney care).
CSL has built a strong reputation among Australian investors for its reliability and consistent dividend payouts, making it a popular choice for those seeking exposure to the growing healthcare sector. Many view CSL as an indirect investment in the rising global demand for healthcare.
RIO shares
Founded in 1873, Rio Tinto is today the world’s second largest metal and mining company, behind only BHP Group. Rio Tinto is engaged in minerals and metals exploration, development, production and processing.
Rio can be divided into four core business units: Aluminium, Copper & Diamonds, Energy & Minerals and Iron Ore.
Of the four units, iron ore (the primary component in steel manufacturing) is by far the largest export. It’s no surprise then that the performance of the company can be strongly affected by the price of iron ore and other key commodities, making earnings somewhat volatile.
CSL share price valuation
We would consider CSL 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, CSL Ltd reported a debt/equity ratio of 62.8%, meaning the company has more equity than debt.
Over the last 5 years, CSL has delivered an average dividend yield of 1.5% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, CSL reported an ROE of 14.6%. For a mature business you generally want to see an ROE of more than 10%, so CSL clears this hurdle.
In FY24, Rio Tinto Ltd reported a debt/equity ratio of 25.0%, meaning the company has more equity than debt.
As for dividends, since 2019 RIO has achieved an average dividend yield of 6.4% per year, and in FY24 reported an ROE of 18.2%
It’s important to keep in mind that these are only a small selection of metrics and don’t give us 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.
