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Highlights
- Transurban Group (ASX:TCL) is seeing a dip in its share price early in 2025.
- Despite challenges, the company’s revenue has been growing steadily.
- Dividends are increasing, with shares trading above their historical average yield.
Transurban Group (ASX:TCL) has faced a modest decline of -0.30% in its share price since the start of 2025. As investors consider the potential of the company, it’s crucial to examine various financial metrics that define its standing in the market.
Founded in 1999, Transurban Group has become a key player in managing and developing toll road networks across Australia, Canada, and the United States. The company oversees 22 urban motorways, including some major routes like the CityLink in Melbourne and the Logan Motorway in Brisbane. A significant part of Transurban’s business model revolves around developing new infrastructure projects that generate revenue from tolls paid by motorists.
When assessing Transurban’s financial health, three primary figures stand out: revenue, gross margin, and profit. For 2024, Transurban reported annual revenue of $4,119 million, reflecting a compound annual growth rate (CAGR) of 12.6% over the past three years. This solid growth highlights the company’s ability to increase its sales despite market fluctuations.
Gross margin is another important metric, offering insight into how efficiently the company operates its core services. For Transurban, the gross margin sits at 57.0%, indicating healthy profitability before accounting for operational expenses.
However, a closer look at Transurban's profit shows a notable decline in recent years. The company reported a profit of $326 million last year, a stark contrast to its $3,303 million profit just three years ago. This significant drop reflects a negative CAGR of -53.8%, raising questions about the company’s profitability trajectory moving forward.
In terms of capital structure, Transurban’s net debt stands at $18,018 million. This figure highlights the company’s reliance on debt financing, which carries inherent risks, especially in an environment with rising interest rates. Transurban’s debt-to-equity ratio of 175.1% shows that the company has more debt than equity, a situation that can be both a risk and an opportunity, depending on future market conditions.
Looking at the dividend yield, Transurban’s shares offer a current yield of approximately 4.63%, which is higher than its 5-year average of 3.64%. This increase in dividend yield suggests that, while the stock price may have faced some decline, Transurban is rewarding shareholders with growing payouts, reflecting a commitment to returning value to investors.
Overall, while Transurban Group has faced some challenges, its steady revenue growth, strong dividend yield, and substantial toll road network suggest a resilient company in the long term.
