ALL share price in focus
Founded by Len Ainsworth in 1953, Aristocrat Leisure is an Australian gambling machine operator that is headquartered in Sydney.
Currently, Aristocrat is the largest manufacturer of gambling machines in Australia and one of the world’s leading producers of slot machines. However, the company’s business extends beyond just physical machines; Aristocrat also develops online games, which have grown to contribute nearly half of its total revenue.
Aristocrat’s gaming machines can either be sold outright to venues or gaming operators or installed with a revenue-sharing model, where a portion of the earnings generated is paid back to Aristocrat on a recurring basis.
STO shares
Santos Ltd is one of Australia’s largest oil and gas companies. Founded in the 1950’s, Santos owns and operates one of Australia’s largest portfolios of oil and gas fields, connected by extensive pipelines and complementary facilities.
The company started life as an exploration-focused business, and the name is an acronym for South Australia Northern Territory Oil Search.
Santos has recently faced criticism and court cases over their climate action targets, with the ACCR accusing the company of greenwashing. At present, Santos’ stated goal is to achieve net-zero Scope 1 & 2 emissions by 2040, however this does not account for Scope 3 emissions (those generated by the use of their products) which account for more than 75% of the company’s total emissions.
ALL & STO share price valuation
As a growth company, some of the trends we might investigate from ALL include revenue growth, profit growth, and return on equity (ROE). These measures can indicate the growth rates and prospects of the company, as well as their ability to generate returns from their assets.
Since 2021, ALL has grown revenue at a rate of 11.7% per year to reach $6,604m in FY24. Over the same stretch of time, net profit has increased from $820m to $1,303m. As for ROE, ALL last reported a ROE of 20.0%.
Since STO is more of a ‘mature’ or ‘blue-chip’ business, some of the metrics that could be considered important include the debt/equity ratio, average yield, and return on equity, or ROE. These are useful as they give us an idea of debt levels and the company’s ability to generate a return on assets and pay out profits (which is what we want from a blue chip). In CY24, Santos Ltd reported a debt/equity ratio of 43.0%, meaning the company has more equity than debt.
As for dividends, since 2020 STO has paid an average dividend yield of 4.6% per year.
Finally, in CY24, STO reported an ROE of 8.2%. For a mature business you’re generally looking for an ROE of more than 10%, so STO’s returns are a bit less than what we’d expect.
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.
