STO share price in focus
Santos Ltd, founded in the 1950s, is one of Australia’s largest oil and gas companies. The company owns and operates an extensive portfolio of oil and gas fields, supported by a network of pipelines and complementary facilities.
Initially established as an exploration-focused business, its name is an acronym for South Australia Northern Territory Oil Search.
In recent years, Santos has faced criticism and legal challenges regarding its climate action targets, with the ACCR accusing the company of greenwashing. Santos has committed to achieving net-zero Scope 1 and 2 emissions by 2040, but this target excludes Scope 3 emissions—those generated by the use of its products—which account for over 75% of the company’s total emissions.
SOL shares
Founded in 1903, Washington H. Soul Pattinson (WHSP) is an investment company with a diversified portfolio spanning various industries and asset classes.
Some of its largest holdings include significant stakes in well-known publicly listed companies such as TPG Telecom (ASX: TPG), New Hope Group (ASX: NHC), and a cross-shareholding in Brickworks (ASX: BKW).
SOL’s goal is to deliver strong returns to its shareholders through capital growth and a consistent increase in dividends as a holding company. As the second-oldest publicly listed company on the ASX, it boasts a long history of capital appreciation and dividend reliability. In fact, it has never missed a dividend payment since its listing in 1903! SOL operates like a family-run LIC, with a focus on the benefit of all shareholders, who are closely aligned with the company’s success.
STO & SOL share price valuation
We would consider STO 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 CY24, Santos Ltd reported a debt/equity ratio of 43.0%, meaning the company has more equity than debt.
Over the last 5 years, STO has delivered an average dividend yield of 4.6% per year. This is important to note if you’re looking for income from your investments.
Finally, in CY24, STO reported an ROE of 8.2%. For a mature business you generally want to see an ROE of more than 10%, so STO’s returns are a bit less than what we’d expect.
Washington H Soul Pattinson & Company Ltd reported a debt/equity ratio of 8.5% in FY24, meaning the company has more equity than debt.
As for dividends, since 2019 SOL has achieved an average dividend yield of 2.4% per year, and in FY24 reported an ROE of 5.6%
Keep in mind that these are only a small selection of metrics. We don’t have 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.
