Downer EDI (ASX:DOW) - Share price, News & Analysis

DOW fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	2/6
Past Performance	1/6
Financial Health	4/6
Dividends	3/6

DOW Stock Overview

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

Rewards

Trading at 74.8% below our estimate of its fair value

Earnings are forecast to grow 13.4% per year

Became profitable this year

Risk Analysis

Unstable dividend track record

Large one-off items impacting financial results

Downer EDI Peers

Brambles

ASX:BXB

AU$16.2b

SG Fleet Group

ASX:SGF

AU$772.9m

Mader Group

ASX:MAD

AU$484.0m

Sugar Terminals

NSX:SUG

AU$367.2m

Price History & Performance

Summary of all time highs, changes and price drops for Downer EDI
Historical stock prices
Current Share Price	AU$5.71
52 Week High	AU$6.87
52 Week Low	AU$4.79
Beta	1.53
1 Month Change	4.96%
3 Month Change	6.13%
1 Year Change	1.78%
3 Year Change	-27.81%
5 Year Change	-10.64%
Change since IPO	252.47%

Recent News & Updates

May 16

Returns On Capital At Downer EDI (ASX:DOW) Paint A Concerning Picture

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an...

Shareholder Returns

	DOW	AU Commercial Services	AU Market
7D	3.8%	6.1%	0.5%
1Y	1.8%	3.6%	-0.2%

Return vs Industry: DOW exceeded the Australian Commercial Services industry which returned -2.8% over the past year.

Return vs Market: DOW exceeded the Australian Market which returned 0.5% over the past year.

Price Volatility

Is DOW's price volatile compared to industry and market?
DOW volatility
DOW Average Weekly Movement	4.6%
Commercial Services Industry Average Movement	7.5%
Market Average Movement	9.4%
10% most volatile stocks in AU Market	16.4%
10% least volatile stocks in AU Market	4.3%

Stable Share Price: DOW is less volatile than 75% of Australian stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: DOW's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1989	41,000	Grant Fenn	https://www.downergroup.com

Downer EDI Limited operates as an integrated services provider in Australia, New Zealand, the Asia-Pacific, South America, and Southern Africa. Its Transport segment provides road network management; routine road maintenance; asset management systems; spray sealing; asphalt laying; and manufacture and supply of bitumen-based products and asphalt products. This segment also engages in the design and construction of light and heavy rail networks, signaling works, track and station works, and bridges; and provides rail safety technology, fleet maintenance, and overhaul services.

Downer EDI Fundamentals Summary

How do Downer EDI's earnings and revenue compare to its market cap?
DOW fundamental statistics
Market Cap	AU$3.85b
Earnings (TTM)	AU$190.40m
Revenue (TTM)	AU$11.18b

20.2x

P/E Ratio

0.3x

P/S Ratio

Is DOW overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
DOW income statement (TTM)
Revenue	AU$11.18b
Cost of Revenue	AU$9.91b
Gross Profit	AU$1.27b
Other Expenses	AU$1.08b
Earnings	AU$190.40m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

Aug 17, 2022

Earnings per share (EPS)	0.28
Gross Margin	11.33%
Net Profit Margin	1.70%
Debt/Equity Ratio	43.2%

How did DOW perform over the long term?

See historical performance and comparison

Dividends

4.2%

Current Dividend Yield

88%

Payout Ratio

New valuation analysis is now available for all ASX stocks. This is in beta.

Future Growth

How is Downer EDI forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

13.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: DOW's forecast earnings growth (13.4% per year) is above the savings rate (1.8%).

Earnings vs Market: DOW's earnings (13.4% per year) are forecast to grow faster than the Australian market (6.1% per year).

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

Revenue vs Market: DOW's revenue (3.5% per year) is forecast to grow slower than the Australian market (4.8% per year).

High Growth Revenue: DOW's revenue (3.5% 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 (9.8%).

Past Performance

How has Downer EDI performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-15.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: DOW has a large one-off gain of A$106.1M impacting its December 31 2021 financial results.

Growing Profit Margin: DOW became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: DOW's earnings have declined by 15.6% per year over the past 5 years.

Accelerating Growth: DOW has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: DOW has become profitable in the last year, making it difficult to compare its past year earnings growth to the Commercial Services industry (3.7%).

Return on Equity

High ROE: DOW's Return on Equity (6.8%) is considered low.

Financial Health

How is Downer EDI's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: DOW's short term assets (A$2.9B) exceed its short term liabilities (A$2.7B).

Long Term Liabilities: DOW's short term assets (A$2.9B) exceed its long term liabilities (A$1.7B).

Debt to Equity History and Analysis

Debt Level: DOW's net debt to equity ratio (19.8%) is considered satisfactory.

Reducing Debt: DOW's debt to equity ratio has increased from 29.2% to 43.2% over the past 5 years.

Debt Coverage: DOW's debt is well covered by operating cash flow (50.4%).

Interest Coverage: DOW's interest payments on its debt are not well covered by EBIT (2.1x coverage).

Balance Sheet

Dividend

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

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

4.20%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: DOW's dividend (4.2%) is higher than the bottom 25% of dividend payers in the Australian market (2.57%).

High Dividend: DOW's dividend (4.2%) is low compared to the top 25% of dividend payers in the Australian market (6.13%).

Stability and Growth of Payments

Stable Dividend: DOW has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: DOW's dividend payments have increased, but the company has only paid a dividend for 9 years.

Earnings Payout to Shareholders

Earnings Coverage: At its current payout ratio (87.6%), DOW's payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (47%), DOW's dividend payments are well covered by cash flows.

Next Steps

Explore strong dividend paying companies in the Commercial Services industry.

Management

How experienced are the management team and are they aligned to shareholders interests?

2.1yrs

Average management tenure

CEO

Grant Fenn (56 yo)

11.83yrs

Tenure

AU$3,313,168

Compensation

Mr. Grant Anthony Fenn, BEc, CA has been the Chief Executive Officer and Managing Director of Downer EDI Limited since July 30, 2010. Mr. Fenn has experience in operational management, strategic developmen...

CEO Compensation Analysis

Compensation vs Market: Grant's total compensation ($USD2.29M) is about average for companies of similar size in the Australian market ($USD2.00M).

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

Leadership Team

Experienced Management: DOW's management team is considered experienced (2.1 years average tenure).

Board Members

Experienced Board: DOW's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

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

Recent Insider Transactions

Ownership Breakdown

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

Data	Last Updated (UTC time)
Company Analysis	2022/05/16 00:00
End of Day Share Price	2022/05/16 00:00
Earnings	2021/12/31
Annual Earnings	2021/06/30