TLS share price in focus
Founded in 1975, Telstra is Australia’s largest telecommunications company by market share, with over 22.5 million retail mobile accounts as of 2023.
Telstra is responsible for building and operating telecommunications networks across Australia, offering a variety of services, including fixed broadband, mobile, data and IP, and digital media. In addition to its operations within Australia, Telstra has a presence in more than 20 countries, providing services to governments and businesses globally.
Telstra’s competitive advantage lies in its extensive reach and scale, covering 99.6% of the Australian population and delivering 5G services to over 85% of the country.
WES shares
Founded in 1914, Wesfarmers is a diversified Australian conglomerate headquartered in Perth. Its operations span retail, chemical, fertiliser, industrial and safety brands and products across Australia and New Zealand.
Wesfarmers is often compared to a publicly listed private equity firm. It has a long history of buying businesses, leveraging their cash flow, re-investing in growth and eventually selling them for a premium. A notable example of this is Coles Group, which it bought in 2007 and spun out in 2018. However, by far (over 50%) of the company’s operating profit comes from Bunnings, the #1 hardware and home improvement business in Australia. Wesfarmers began buying parcels in Bunnings in 1987, eventually acquiring the final 52% in 1994 for $594 million.
Wesfarmers has long been considered a leading blue chip stock on the ASX and is known for paying a consistent dividend. Other well-known brands under the Wesfarmers umbrella include Blackwoods, Kmart, Target, Officeworks, and Priceline Pharmacy.
TLS share price valuation
We would consider TLS to be a ‘mature’ or ‘blue-chip’ business, so some of the metrics that could be worth considering include the debt/equity ratio, average yield, and return on equity, or ROE. These measures give us a sense of the company’s debt levels, their ability to generate returns from their assets, and their ability to consistently return profits to shareholders.
For FY24, Telstra Group Ltd reported a debt/equity ratio of 99.4%, meaning the company has more equity than debt.
Over the last 5 years, TLS has delivered an average dividend yield of 3.6% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, TLS reported an ROE of 10.7%. For a mature business you generally want to see an ROE of more than 10%, so TLS clears this hurdle.
In FY24, Wesfarmers Ltd reported a debt/equity ratio of 131.4%, meaning the company is leveraged.
As for dividends, since 2019 WES has achieved an average dividend yield of 3.4% per year, and in FY24 reported an ROE of 30.3%
It’s important to keep in mind that these are only a small selection of metrics and don’t give us enough information to value the business or make an investment decision. To learn more about valuation, check out one of our free online investing courses.
