ASX:DOW

Stock Analysis Report

Executive Summary

Downer EDI Limited operates as a services provider in Australia, New Zealand, the Asia-Pacific, South America, and Southern Africa.

Rewards

Trading at 48.1% below its fair value

Earnings are forecast to grow 9.48% per year

Earnings grew by 299.8% over the past year

Risk Analysis

Has a high level of debt

Unstable dividend track record



Snowflake Analysis

Proven track record with adequate balance sheet and pays a dividend.


Similar Companies

Share Price & News

How has Downer EDI's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: DOW has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.2%

DOW

-1.3%

AU Commercial Services

-0.07%

AU Market


1 Year Return

36.0%

DOW

19.3%

AU Commercial Services

19.1%

AU Market

Return vs Industry: DOW exceeded the Australian Commercial Services industry which returned 19.3% over the past year.

Return vs Market: DOW exceeded the Australian Market which returned 19.1% over the past year.


Shareholder returns

DOWIndustryMarket
7 Day-0.2%-1.3%-0.07%
30 Day3.0%1.6%-0.6%
90 Day3.7%2.9%0.4%
1 Year41.2%36.0%25.6%19.3%25.0%19.1%
3 Year50.0%34.3%24.7%11.5%36.0%17.4%
5 Year155.6%102.2%72.1%40.3%63.2%26.5%

Price Volatility Vs. Market

How volatile is Downer EDI's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Downer EDI undervalued compared to its fair value and its price relative to the market?

48.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: DOW (A$8.23) is trading below our estimate of fair value (A$15.85)

Significantly Below Fair Value: DOW is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: DOW is poor value based on its PE Ratio (19.2x) compared to the Commercial Services industry average (19.1x).

PE vs Market: DOW is poor value based on its PE Ratio (19.2x) compared to the Australian market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: DOW is poor value based on its PEG Ratio (2x)


Price to Book Ratio

PB vs Industry: DOW is good value based on its PB Ratio (1.8x) compared to the AU Commercial Services industry average (2.4x).


Next Steps

Future Growth

How is Downer EDI forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

9.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DOW's forecast earnings growth (9.5% per year) is above the savings rate (1.1%).

Earnings vs Market: DOW's earnings (9.5% per year) are forecast to grow faster than the Australian market (9.3% per year).

High Growth Earnings: DOW's earnings are forecast to grow, but not significantly.

Revenue vs Market: DOW's revenue (3.6% per year) is forecast to grow slower than the Australian market (3.6% per year).

High Growth Revenue: DOW's revenue (3.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: DOW's Return on Equity is forecast to be low in 3 years time (11.1%).


Next Steps

Past Performance

How has Downer EDI performed over the past 5 years?

-4.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: DOW has high quality earnings.

Growing Profit Margin: DOW's current net profit margins (2%) are higher than last year (0.5%).


Past Earnings Growth Analysis

Earnings Trend: DOW's earnings have declined by -4.8% per year over the past 5 years.

Accelerating Growth: DOW's earnings growth over the past year (299.8%) exceeds its 5-year average (-4.8% per year).

Earnings vs Industry: DOW earnings growth over the past year (299.8%) exceeded the Commercial Services industry 18.9%.


Return on Equity

High ROE: DOW's Return on Equity (9.1%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Downer EDI's financial position?


Financial Position Analysis

Short Term Liabilities: DOW's short term assets (A$3.2B) exceed its short term liabilities (A$2.9B).

Long Term Liabilities: DOW's short term assets (A$3.2B) exceed its long term liabilities (A$2.0B).


Debt to Equity History and Analysis

Debt Level: DOW's debt to equity ratio (55.9%) is considered high.

Reducing Debt: DOW's debt to equity ratio has increased from 20.4% to 55.9% over the past 5 years.

Debt Coverage: DOW's debt is well covered by operating cash flow (37%).

Interest Coverage: DOW's interest payments on its debt are well covered by EBIT (5.5x coverage).


Balance Sheet

Inventory Level: DOW has a high level of physical assets or inventory.

Debt Coverage by Assets: DOW's debt is covered by short term assets (assets are 1.9x debt).


Next Steps

Dividend

What is Downer EDI's current dividend yield, its reliability and sustainability?

3.40%

Current Dividend Yield


Dividend Yield vs Market

company3.4%marketbottom25%2.4%markettop25%5.5%industryaverage2.6%forecastin3Years4.1%

Current dividend yield vs market & industry

Notable Dividend: DOW's dividend (3.4%) is higher than the bottom 25% of dividend payers in the Australian market (2.44%).

High Dividend: DOW's dividend (3.4%) is low compared to the top 25% of dividend payers in the Australian market (5.55%).


Stability and Growth of Payments

Stable Dividend: DOW's dividend payments have been volatile in the past 10 years.

Growing Dividend: DOW's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (65.3%), DOW's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: DOW's dividends in 3 years are forecast to be covered by earnings (58.9% payout ratio).


Next Steps

Management

What is the CEO of Downer EDI's salary, the management and board of directors tenure and is there insider trading?

3.2yrs

Average management tenure


CEO

Grant Fenn (54yo)

9.4yrs

Tenure

AU$4,727,178

Compensation

Mr. Grant Anthony Fenn, B Ec, CA has been the Chief Executive Officer and Managing Director of Downer EDI Limited since July 30, 2010. Mr. Fenn has over 30 years’ experience in operational management, stra ...


CEO Compensation Analysis

Compensation vs Market: Grant's total compensation ($USD3.23M) is above average for companies of similar size in the Australian market ($USD2.25M).

Compensation vs Earnings: Grant's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.2yrs

Average Tenure

Experienced Management: DOW's management team is considered experienced (3.2 years average tenure).


Board Age and Tenure

5.7yrs

Average Tenure

63yo

Average Age

Experienced Board: DOW's board of directors are considered experienced (5.7 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellAU$731,29013 Nov 19
Vinva Investment Management
EntityCompany
Shares89,692
Max PriceAU$8.15
BuyAU$1,314,27513 Nov 19
Vinva Investment Management
EntityCompany
Shares160,211
Max PriceAU$8.20
SellAU$3,273,14417 Oct 19
Vinva Investment Management
EntityCompany
Shares417,881
Max PriceAU$7.83
BuyAU$3,091,27517 Oct 19
Vinva Investment Management
EntityCompany
Shares400,544
Max PriceAU$7.72
SellAU$152,97806 Oct 19
Dimensional Fund Advisors L.P.
EntityCompany
Shares19,830
Max PriceAU$7.81
BuyAU$169,62006 Oct 19
Dimensional Fund Advisors L.P.
EntityCompany
Shares21,595
Max PriceAU$7.85
SellAU$43,050,33726 Sep 19
Dimensional Fund Advisors L.P.
EntityCompany
Shares5,763,240
Max PriceAU$7.68
BuyAU$2,236,92326 Sep 19
Dimensional Fund Advisors L.P.
EntityCompany
Shares310,320
Max PriceAU$8.01
SellAU$1,848,47629 Aug 19
Vinva Investment Management
EntityCompany
Shares546,875
Max PriceAU$7.51
BuyAU$1,833,02529 Aug 19
Vinva Investment Management
EntityCompany
Shares661,294
Max PriceAU$7.60
BuyAU$49,99929 Aug 19
Peter Watson
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares6,329
Max PriceAU$7.90
BuyAU$23,67028 Aug 19
Teresa Handicott
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares3,000
Max PriceAU$7.89
SellAU$5,811,88308 Aug 19
Vinva Investment Management
EntityCompany
Shares804,412
Max PriceAU$7.23
BuyAU$7,829,86908 Aug 19
Vinva Investment Management
EntityCompany
Shares1,045,411
Max PriceAU$7.49
BuyAU$4,913,98918 Jul 19
Fil Responsible Entity (Australia) Limited
EntityCompany
Shares703,909
Max PriceAU$6.98
BuyAU$1,389,39418 Jul 19
FIL Limited
EntityCompany
Shares199,025
Max PriceAU$6.98
BuyAU$1,451,96417 Jul 19
FIL Limited
EntityCompany
Shares210,040
Max PriceAU$6.91
BuyAU$14,785,21907 May 19
Vinva Investment Management
EntityCompany
Shares1,892,280
Max PriceAU$7.81
SellAU$12,267,51607 May 19
Vinva Investment Management
EntityCompany
Shares1,609,884
Max PriceAU$7.62
SellAU$009 Apr 19
FIL Limited
EntityCompany
Shares1,117,567
Max PriceAU$7.40
BuyAU$009 Apr 19
FIL Limited
EntityCompany
Shares4,882,627
Max PriceAU$7.50
SellAU$1,426,56920 Feb 19
Vinva Investment Management
EntityCompany
Shares194,650
Max PriceAU$7.33
BuyAU$157,41320 Feb 19
Vinva Investment Management
EntityCompany
Shares21,917
Max PriceAU$7.18
SellAU$43,902,35611 Feb 19
New York Life Investment Management LLC
EntityCompany
Shares6,625,715
Max PriceAU$6.63
BuyAU$41,174,27111 Feb 19
New York Life Investment Management LLC
EntityCompany
Shares5,614,572
Max PriceAU$7.33
BuyAU$85,444,40911 Feb 19
Vinva Investment Management
EntityCompany
Shares12,458,161
Max PriceAU$6.86
SellAU$18,906,25811 Feb 19
Vinva Investment Management
EntityCompany
Shares2,728,000
Max PriceAU$6.93
SellAU$54,862,17415 Jan 19
Dimensional Fund Advisors L.P.
EntityCompany
Shares8,898,857
Max PriceAU$7.44
BuyAU$45,625,93615 Jan 19
Dimensional Fund Advisors L.P.
EntityCompany
Shares7,598,611
Max PriceAU$7.45
BuyAU$29,25115 Jan 19
M Fund, Inc. - M International Equity Fund
EntityCompany
Shares4,400
Max PriceAU$6.65
SellAU$527,46015 Jan 19
Columbia Management Investment Advisers, LLC
EntityCompany
Shares79,616
Max PriceAU$6.63
BuyAU$14,865,68302 Jan 19
AustralianSuper Pty. Ltd.
EntityCompany
Shares1,961,172
Max PriceAU$7.58
BuyAU$13,934,02416 Dec 18
The Vanguard Group, Inc.
EntityCompany
Shares1,754,915
Max PriceAU$7.94

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Grant Fenn (54yo)

    MD, CEO & Director

    • Tenure: 9.4yrs
    • Compensation: AU$4.73m
  • David Cattell

    Group Head of Strategy

    • Tenure: 4.8yrs
    • Compensation: AU$2.37m
  • Sergio Cinerari

    Chief Operating Officer of Australian Operations

    • Tenure: 4.8yrs
    • Compensation: AU$2.53m
  • Brendan Petersen

    Chief Operating Officer of Corporate Services

    • Tenure: 0.9yrs
    • Compensation: AU$2.09m
  • Steve Killeen

    Chief Executive Officer of New Zealand Business

    • Tenure: 2.9yrs
    • Compensation: AU$1.54m
  • Michael Sharp

    Group Head of Corporate Affairs & Investors Relations

    • Tenure: 0yrs
  • Steve Schofield

    Group Head of Human Resources & Industrial Relations

    • Tenure: 2.3yrs
  • Julie Wills

    Group Head of Zero Harm

    • Tenure: 4.9yrs
  • Michael Ferguson

    Chief Financial Officer

    • Tenure: 3.2yrs
    • Compensation: AU$1.79m
  • Robert Regan

    Group General Counsel & Company Secretary

    • Tenure: 0.9yrs

Board Members

  • Peter Watson (63yo)

    Independent Non-Executive Director

    • Tenure: 0.6yrs
    • Compensation: AU$18.58k
  • Mike Harding (70yo)

    Independent Non Executive Chairman

    • Tenure: 9.1yrs
    • Compensation: AU$410.63k
  • Grant Fenn (54yo)

    MD, CEO & Director

    • Tenure: 9.4yrs
    • Compensation: AU$4.73m
  • Nicole Hollows (48yo)

    Independent Non-Executive Director

    • Tenure: 1.5yrs
    • Compensation: AU$179.42k
  • Phil Garling (65yo)

    Independent Non-Executive Director

    • Tenure: 8.1yrs
    • Compensation: AU$180.68k
  • Charles Thorne (69yo)

    Independent Non-Executive Director

    • Tenure: 9.4yrs
    • Compensation: AU$197.10k
  • Teresa Handicott (56yo)

    Independent Non-Executive Director

    • Tenure: 3.3yrs
    • Compensation: AU$180.68k

Company Information

Downer EDI Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Downer EDI Limited
  • Ticker: DOW
  • Exchange: ASX
  • Founded: 1989
  • Industry: Diversified Support Services
  • Sector: Commercial Services
  • Market Cap: AU$4.870b
  • Shares outstanding: 591.74m
  • Website: https://www.downergroup.com

Number of Employees


Location

  • Downer EDI Limited
  • Triniti Business Campus
  • Level 2
  • North Ryde
  • New South Wales
  • 2113
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
DOWASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJun 1998
DNER.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJun 1998
DNEDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJun 1998
DOWCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJun 1998

Biography

Downer EDI Limited operates as a services provider in Australia, New Zealand, the Asia-Pacific, South America, and Southern Africa. Its Transport segment provides road network management and road, asset ma ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/10 10:31
End of Day Share Price2019/12/10 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.