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Highlights
- A2 Milk sees steady revenue and profit growth with robust ROE.
- Woolworths holds strong market share, but shows low recent ROE.
- Both companies remain key players within the ASX200 index.
Two prominent names on the ASX200 index — The a2 Milk Company Ltd (A2M) and Woolworths Group Ltd (WOW) — are drawing market attention with their distinct business strengths and recent share price movements.
A2 Milk (ASX:A2M)
A2 Milk has seen its share price climb 39.0% since the start of 2025. Established in New Zealand in 2000, the company focuses on dairy products that contain only the A2 protein type, marketed under its signature “a2” brand. A2 Milk collaborates with certified dairy farms across Australia and relies on Synlait Milk in New Zealand to manufacture its instant formula products.
The company’s appeal lies in its health-focused offering, especially for those with digestive sensitivity to standard milk.
A look into financials reveals promising trends. Since FY21, revenue has increased at an annual rate of 11.6%, reaching $1,673 million in FY24. Net profit more than doubled during this period, from $81 million to $168 million. The company has maintained a healthy return on equity (ROE) of 12.8%, reflecting effective capital utilisation — a valuable indicator when analysing growth-oriented players on the ASX200 index.
Woolworths (ASX:WOW)
Woolworths, one of Australia’s largest retailers, operates a vast network of over 3,000 stores and employs more than 100,000 people. Its operations span across supermarkets, discount stores under the Big W banner, and B2B segments such as foodservice distribution through PFD. Despite diversification, grocery retail remains its dominant revenue stream, with a market share exceeding 35%.
WOW has traditionally attracted those seeking steady income through ASX dividend stocks, thanks to its consistent fully franked payouts. From 2020 to FY24, the company delivered an average dividend yield of 2.9%. These features position Woolworths as a defensive stock — a key trait during economic slowdowns.
However, its FY24 metrics reflect certain concerns. The reported ROE was just 1.9%, well below the desirable benchmark of 10% for established enterprises. Coupled with a debt-to-equity ratio of 300.2%, this raises questions about capital efficiency and leverage, even for a mature player.
