The Qantas Airways Limited (ASX:QAN) share price has increased 57.8% since the start of 2024. The Fortescue Ltd (ASX:FMG) share price is 23.1% off its 52-week low.
QAN share price in focus
Qantas was founded in 1921 and is today Australia’s largest airline operator by fleet size, number of international flights, and number of destinations.
It’s involved in the operation of domestic and international flights under its Qantas and Jetstar brands, as well as freight services and the management of its frequent flyer loyalty program.
Despite (or perhaps because of) its significant market power, the airline has fallen out of favour with Australian consumers over the last few years, consistently ranking as one of the country’s most distrusted brands according to Roy Morgan surveys. Still, with a huge market share and more services than other airlines they’ve managed to continue growing revenue and profit since the end of the pandemic.
FMG shares
Fortescue Ltd is an iron ore production and exploration company started by the well-known Australian polymath Andrew “Twiggy” Forrest. The company was founded in 2003 and has assets across the Pilbara region of Western Australia.
Fortescue’s main operation is iron ore production, shipping more than 190 million tonnes annually. However, Fortescue has also been ramping up exploration activities for materials like copper, rare earths, and lithium. This exploration covers countries including Australia, Argentina, Chile, Brazil, and Kazakhstan
This is all part of Fortescue’s long-term strategy to take advantage of the shift to renewable energy. Demand for copper, lithium, and other rare earths are expected to skyrocket with increasing battery and electric vehicle production and Fortescue intends to fill that demand.
QAN share price valuation
One way to have a ‘quick read’ of where the QAN share price is could be to study something like dividend yield over time. This can give us a sense of the stability of the company and whether they can consistently pay out a percentage of profits.
Remember, the dividend yield is basically the ‘cash flow’ to a shareholder, but it can fluctuate year-to-year or between payments. Currently, Qantas Airways Limited shares have a dividend yield of around 0.00%, compared to its 5-year average of 1.22%. In other words, QAN shares are trading lower than their historical average dividend yield. Be careful how you interpret this information though – it could mean that dividends have fallen, or that the share price is increasing, or both. In the case of QAN, we can see that last year’s dividend was less than the 3-year average, so the dividend has been falling.
FMG is offering a historical dividend yield of around 10.04%, which compares to its 5-year average of 10.52%. Of course, this is just one of many ways you could put a value on FMG shares. The Rask websites offer free online investing courses, created by analysts explaining valuation methods like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! It’s important to look at multiple methods when you’re trying to value the FMG share price.
