FMG share price in focus
Fortescue Ltd, founded in 2003 and headquartered in Perth, is a leading iron ore production and exploration company with assets located in the Pilbara region of Western Australia.
The company primarily focuses on iron ore production, shipping over 190 million tonnes annually. In addition to its iron ore operations, Fortescue has been expanding its exploration efforts across Australia, Argentina, Chile, Brazil, and Kazakhstan, targeting key materials such as copper, rare earths, and lithium.
This expansion aligns with the company’s long-term strategy to capitalise on the growing demand for these resources, driven by the global shift to renewable energy. Fortescue aims to meet the increasing need for copper, lithium, and other rare earths in the coming years.
QAN shares
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 & QAN share price valuation
We would consider FMG 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, Fortescue Ltd reported a debt/equity ratio of 27.6%, meaning the company has more equity than debt.
Over the last 5 years, FMG has delivered an average dividend yield of 10.5% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, FMG reported an ROE of 30.2%. For a mature business you generally want to see an ROE of more than 10%, so FMG clears this hurdle.
As more of a growth company, some of the trends we might consider for QAN shares include revenue growth, profit growth, and return on equity (ROE). I say ‘trends’ because it’s always important to look at these figures over a few years. The trend is a much more valuable figure than a single measure at one point in time.
Over the last 3 years, QAN has increased revenue at a rate of 54.6% per year to hit $21,939m in FY24. Meanwhile, net profit has increased from -$1,692m to $1,255m. As for ROE, QAN’s last reported figure was 823.0%.
Please keep in mind that context is important. These metrics give us some indication of company performance, but it’s just the start of valuing FMG or QAN shares. To learn more about valuation, check out one of our free online investing courses.
