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.
TCL shares
Transurban, founded in 1999, manages and develops urban toll road networks in Australia, Canada and the United States.
Transurban has an interest in 22 urban motorways across its portfolio. Some of its notable motorways include the CityLink in Melbourne, Hills M2 in Sydney and the Logan Motorway in Brisbane.
Transurban invests heavily in the development of new projects which are paid back through collecting toll revenue from motor vehicles.
STO & TCL 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.
As for Transurban Group, they reported a debt/equity ratio of 175.1% in FY24, meaning the company is leveraged.
Since 2019 TCL has achieved an average dividend yield of 3.6% per year, and in FY24 reported an ROE of 3.0%
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.
