The CSL Ltd (ASX:CSL) share price is down -1.11% since the start of 2024. Here are the key numbers that could shape its performance in 2025.
CSL share price in focus
CSL is a global biotechnology company that creates and delivers life-saving medicines, aiming to protect public health and improve the quality of life for those with life-threatening conditions.
The company operates through three main divisions: CSL Behring, CSL Seqirus, and CSL Vifor. Behring, acquired in 2004, focuses on manufacturing and distributing blood plasma products. Seqirus, formed from the rebranding of BioCSL and the acquisition of Novartis’ flu business in 2015, develops flu-related products and provides pandemic-related services to governments. Vifor specializes in products for iron deficiency and nephrology (renal/kidney care).
CSL has built a strong reputation among Australian investors for its reliability and consistent dividend payouts, making it a popular choice for those seeking exposure to the growing healthcare sector. Many view CSL as an indirect investment in the rising global demand for healthcare.
The key metrics
For investors, CSL’s revenue, gross margin, and profit can provide valuable insights into the company’s performance.
CSL last reported an annual revenue of $14,800m with a compound annual growth rate (CAGR) over the last 3 years of 12.8% per year. While the absolute number is useful to know, the key point is the trend. We want to see a consistent, upward trajectory in revenue.
Gross margin measures profitability before taking into account overhead costs – it reflects the strength of the company’s core business operations. CSL’s latest reported gross margin stood at 52.1%.
Finally, the number we’re most interested in – profit. Last financial year CSL Ltd reported a profit of $2,642m. Three years ago they made a profit of $2,375m, representing a CAGR of 3.6%.
Financial health of CSL shares
Profitability is important, but equally important is the capital health of the company. We want to know about the company’s leverage, their capacity to pay debts, and their ability to generate a return on assets. One measure we can look at is net debt. This is simply the total debt minus the company’s cash holdings.
CSL Ltd’s net debt currently sits at $10,526m. Higher debt levels can increase sensitivity to interest rate changes and economic cycles.
Another figure we can look at is the debt/equity percentage. This tells us how much debt the company has relative to shareholder equity – this is also known as leverage. CSL has more equity than debt, with a debt/equity ratio of 62.8%.
Finally, we can look at the return on equity (ROE). The ROE tells us how efficiently the company is turning shareholder equity into profit – high numbers indicate the company is generating a lot of value for investors, while a low number raises concerns that capital isn’t necessarily being allocated efficiently. CSL generated an ROE of 14.6% in FY24.
What to make of CSL shares?
With strong revenue growth over the last 3 years, profits trending upwards, and a solid ROE, the CSL share price could be one worth watching in 2025.
Please keep in mind this should only be the beginning of your research. It’s important to get a good grasp of the company’s financials and compare it to its peers. It’s also important to make sure the company is priced fairly. To learn more about share price valuation, you can sign up for one of our many free online investing courses.
