Morningstar

Downer EDI Ltd DOW

Morningstar Rating
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Stock XASX Rating as of
A$5.44 −0.02 (0.37%)
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As of Delayed Price Closed

Company Report

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Downer Earnings: Turnaround Continues and Outlook Remains Strong

Mark Taylor

No-moat urban services company Downer reported a strong fiscal 2024 result and added to it with a bullish outlook statement. This is a far cry from the company of just 18 months ago, weathering market ire over accounting irregularities and weather disruptions, along with a plunge in earnings. The company declared a final AUD 11 cent dividend, bringing the fiscal 2024 total up 31% to a better-than-anticipated AUD 17 cents—an as-expected 68% payout ratio but on the higher earnings.

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Price vs Fair Value

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DOW is trading at a 433% premium.
Price
A$5.44
Fair Value
A$1.21
Uncertainty
High
1-Star Price
A$2.18
5-Star Price
A$9.95
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Downer is emerging from a period of turmoil and transformation. Restructurings, write-downs, major project losses, and contract disappointments of the past appear to be over.

Bears

Major rail maintenance contracts could be problematic if a high level of reliability is not achieved.

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Trading Information

Previous Close Price
A$5.46
Day Range
A$5.35–5.50
52-Week Range
A$3.68–5.88
Bid/Ask
A$5.36 / A$5.52
Market Cap
A$3.65 Bil
Volume/Avg
1.5 Mil / 1.3 Mil

Key Statistics

Price/Earnings (Normalized)
28.72
Price/Sales
0.33
Dividend Yield (Trailing)
3.13%
Dividend Yield (Forward)
3.13%
Total Yield
3.13%

Company Profile

Downer operates engineering, construction, and maintenance; transport; technology and communications; utilities; and rail units. The future of Downer is focused on urban services, and mining and high-risk construction businesses have been sold. The engineering, construction, and maintenance business had exposure to mining and energy projects through consulting services. The mining division had provided contracted mining services. The rail division services and maintains passenger rolling stock, including locomotives and wagons.
Sector
Industrials
Industry
Engineering & Construction
Stock Style Box
Mid Value
Total Number of Employees
56,000
Website
https://www.downergroup.com

Competitors

Valuation

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Metric
DOW
VNT
SW
Price/Earnings (Normalized)
 28.7219.2015.13
Price/Book Value
 1.766.502.42
Price/Sales
 0.330.650.47
Price/Cash Flow
 6.7012.6610.97
Price/Earnings
DOW
VNT
SW

Financial Strength

Metric
DOW
VNT
SW
Quick Ratio
 1.030.601.11
Current Ratio
 1.141.081.22
Interest Coverage
 1.806.245.65
Quick Ratio
DOW
VNT
SW

Profitability

Metric
DOW
VNT
SW
Return on Assets (Normalized)
 3.05%6.81%5.08%
Return on Equity (Normalized)
 9.45%35.68%22.19%
Return on Invested Capital (Normalized)
 6.50%16.35%9.76%
Return on Assets
DOW
VNT
SW

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