PME share price in focus
Founded in 1983, Pro Medicus is a provider of radiology IT software for hospitals, imaging centres and health care groups worldwide.
The Pro Medicus suite of products centre around radiology information systems (RIS), Picture Archiving and Communication Systems (PACS), and advanced visualisation solutions. These products support everything from patient scheduling and billing to fast medical imaging interpretations and analysis.
The company’s value proposition partly lies within its flagship Visage software which allows radiologists to view large image files generated by X-rays remotely on mobile devices. This allows diagnostic decisions to be made on-the-go and ideally improves patient outcomes.
While it may be large, Pro Medicus Limited is a growth stock, and so it requires a different set of rules and may not be straightforward to value at times. Studies have shown that over 5-10+ years, it’s top-line revenue growth which explains a stock’s performance. That’s why it’s good to see Pro Medicus Limited is able to grow revenue at 33.4% per year, a strong clip.
MIN shares
Mineral Resources Limited is a diversified Australian mining company focused on lithium and iron ore extraction across Western Australia.
MIN also provides mining and engineering services for external clients through its wholly-owned subsidiary, CSI Mining Services (CSI). Through CSI, Mineral Resources can provide capital infrastructure and operational expertise to clients across WA, Queensland, and the Northern Territory.
MIN aims to set itself apart from its competitors by maintaining in-house engineering and construction capability that grants full control and flexibility during product development.
PME share price valuation
As a growth company, some of the trends we would be looking for from PME include revenue growth, profit growth, and return on equity (ROE). Since 2021, PME has grown revenue at a rate of 33.4% per year to reach $162m in FY24. Over the same time period, net profit has increased from $31m to $83m. PME last reported a ROE of 50.7%.
Since MIN is more of a ‘mature’ or ‘blue-chip’ business, some of the metrics that might be important to us include the debt/equity ratio, average yield, and return on equity, or ROE. In FY24, Mineral Resources Ltd reported a debt/equity ratio of 148.9%, meaning the company is leveraged (it has more debt than equity). This can increase risk so it’s important that a leveraged company has stable returns and the capacity to pay interest on its debts.
As for dividends, since 2019 MIN has achieved an average dividend yield of 2.4% per year.
Finally, in FY24, MIN reported an ROE of 3.2%. For a mature business you generally want to see an ROE of more than 10%, so MIN’s returns are a bit less than what we’d expect.
It’s important to keep in mind that these are only a selection of metrics and don’t give us enough information to value the business or make an investment decision. To learn more about valuation, I’d recommend checking out one of our free online investing courses.
