DB:DNE

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.


Snowflake Analysis

Undervalued established dividend payer.


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: DNE's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-1.4%

DNE

1.3%

DE Commercial Services

-0.2%

DE Market


1 Year Return

-6.5%

DNE

-6.5%

DE Commercial Services

13.7%

DE Market

Return vs Industry: DNE matched the German Commercial Services industry which returned -6.5% over the past year.

Return vs Market: DNE underperformed the German Market which returned 13.7% over the past year.


Shareholder returns

DNEIndustryMarket
7 Day-1.4%1.3%-0.2%
30 Day-23.0%-1.6%0.3%
90 Day-15.1%3.6%3.7%
1 Year-4.8%-6.5%-3.2%-6.5%17.2%13.7%
3 Year-9.9%-18.1%13.0%3.2%15.4%5.3%
5 Year69.5%37.4%3.6%-10.9%21.3%4.7%

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

No news available

Valuation

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

40.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: DNE (€4.16) is trading below our estimate of fair value (€6.95)

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


Price To Earnings Ratio

PE vs Industry: DNE is good value based on its PE Ratio (19.8x) compared to the Commercial Services industry average (31.8x).

PE vs Market: DNE is good value based on its PE Ratio (19.8x) compared to the German market (20.9x).


Price to Earnings Growth Ratio

PEG Ratio: DNE is poor value based on its PEG Ratio (1.4x)


Price to Book Ratio

PB vs Industry: DNE is good value based on its PB Ratio (1.5x) compared to the DE Commercial Services industry average (3.3x).


Next Steps

Future Growth

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

14.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DNE's forecast earnings growth (14.1% per year) is above the savings rate (-0.4%).

Earnings vs Market: DNE's earnings (14.1% per year) are forecast to grow faster than the German market (13.1% per year).

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

Revenue vs Market: DNE's revenue (2.2% per year) is forecast to grow slower than the German market (5% per year).

High Growth Revenue: DNE's revenue (2.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: DNE's Return on Equity is forecast to be low in 3 years time (10.3%).


Next Steps

Past Performance

How has Downer EDI performed over the past 5 years?

0.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: DNE has high quality earnings.

Growing Profit Margin: DNE's current net profit margins (1.6%) are lower than last year (1.7%).


Past Earnings Growth Analysis

Earnings Trend: DNE's earnings have grown by 0.2% per year over the past 5 years.

Accelerating Growth: DNE's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: DNE had negative earnings growth (-1.2%) over the past year, making it difficult to compare to the Commercial Services industry average (10.9%).


Return on Equity

High ROE: DNE's Return on Equity (7.6%) 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: DNE's short term assets (A$3.2B) exceed its short term liabilities (A$2.9B).

Long Term Liabilities: DNE's short term assets (A$3.2B) exceed its long term liabilities (A$2.8B).


Debt to Equity History and Analysis

Debt Level: DNE's debt to equity ratio (63%) is considered high.

Reducing Debt: DNE's debt to equity ratio has increased from 28.2% to 63% over the past 5 years.

Debt Coverage: DNE's debt is not well covered by operating cash flow (14.4%).

Interest Coverage: DNE's interest payments on its debt are well covered by EBIT (4.4x coverage).


Balance Sheet

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

Debt Coverage by Assets: DNE's debt is covered by short term assets (assets are 1.7x debt).


Next Steps

Dividend

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

4.06%

Current Dividend Yield


Upcoming Dividend Payment

TodayFeb 21 2020Ex Dividend DateFeb 25 2020Dividend Pay DateMar 25 202029 days from Ex DividendBuy in the next 3 days to receive upcoming dividend

Dividend Yield vs Market

Notable Dividend: DNE's dividend (4.06%) is higher than the bottom 25% of dividend payers in the German market (1.31%).

High Dividend: DNE's dividend (4.06%) is in the top 25% of dividend payers in the German market (3.65%)


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (80.4%), DNE's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: DNE's dividends in 3 years are forecast to be covered by earnings (58.1% payout ratio).


Next Steps

Management

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

3.3yrs

Average management tenure


CEO

Grant Fenn (54yo)

9.6yrs

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 ($USD3.13M) is above average for companies of similar size in the German market ($USD2.27M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Grant Fenn
MD, CEO & Director9.6yrsAU$4.73m0.27% A$6.7m
Michael Ferguson
Chief Financial Officer3.3yrsAU$1.79m0.0012% A$30.1k
Sergio Cinerari
Chief Operating Officer of Australian Operations5yrsAU$2.53m0.018% A$450.1k
Brendan Petersen
Chief Operating Officer of Corporate Services1.1yrsAU$2.09m0.0026% A$64.4k
Steve Killeen
Chief Executive Officer of New Zealand Business3.1yrsAU$1.54m0.00045% A$11.3k
Michael Sharp
Group Head of Corporate Affairs & Investors Relations0yrsno datano data
Robert Regan
Group General Counsel & Company Secretary1.1yrsno datano data
Steve Schofield
Group Head of Human Resources & Industrial Relations2.5yrsno datano data
David Cattell
Group Head of Strategy5yrsAU$2.37mno data
Julie Wills
Group Head of Zero Harm5.1yrsno datano data

3.3yrs

Average Tenure

Experienced Management: DNE's management team is considered experienced (3.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Grant Fenn
MD, CEO & Director9.6yrsAU$4.73m0.27% A$6.7m
Peter Watson
Independent Non-Executive Director0.8yrsAU$18.58k0.0011% A$26.8k
Richard Harding
Independent Non Executive Chairman9.3yrsAU$410.63k0.0049% A$122.0k
Nicole Hollows
Independent Non-Executive Director1.7yrsAU$179.42k0.00051% A$12.8k
Philip Garling
Independent Non-Executive Director8.3yrsAU$180.68k0.0034% A$84.4k
Charles Thorne
Independent Non-Executive Director9.6yrsAU$197.10k0.014% A$350.7k
Teresa Handicott
Independent Non-Executive Director3.4yrsAU$180.68k0.0029% A$71.9k

5.8yrs

Average Tenure

63yo

Average Age

Experienced Board: DNE's board of directors are considered experienced (5.8 years average tenure).


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.


Top Shareholders

Company Information

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


Key Information

  • Name: Downer EDI Limited
  • Ticker: DNE
  • Exchange: DB
  • Founded: 1989
  • Industry: Diversified Support Services
  • Sector: Commercial Services
  • Market Cap: AU$4.088b
  • Listing Market Cap: AU$2.505b
  • Shares outstanding: 592.47m
  • Website: https://www.downergroup.com

Number of Employees


Location

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

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
DOWASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJun 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 management, spray sealing, asphalt laying, landfill diversion, and intelligent transport system services; and manufactures bitumen based 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 asset operation and overhaul services. The company’s Utilities segment plans, designs, constructs, operates, maintains, manages, and decommissions power and gas network assets; provides water and wastewater treatment, and network construction and rehabilitation services; and designs, constructs, and maintains renewable assets in the wind, solar, and power system storage sectors. This segment also offers technology and communications solutions, including design, civil construction, network construction, operation, and maintenance services for fiber, copper, and radio networks. Its Facilities segment offers outsourced facility, catering and laundry, technical and engineering, and maintenance and asset management services, as well as refrigeration solutions. The company’s Engineering, Construction and Maintenance segment provides design, engineering, construction, shutdown, turnaround and outage delivery, operation, maintenance, and ongoing management services for various projects; and designs and manufactures mineral process equipment. Its Mining segment provides resource definition, exploration drilling, and mine feasibility studies; open cut and underground mining services; and drilling, blasting, crushing, asset management, tire management, and mine closure and rehabilitation services, as well as manufactures explosives. The company was incorporated in 1989 and is headquartered in Sydney, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/20 21:44
End of Day Share Price2020/02/20 00:00
Earnings2019/12/31
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.