A2M share price in focus
Founded in New Zealand in 2000, A2 Milk Company specializes in dairy products containing the naturally occurring A2 protein variant, sold under the A2 brand.
The company does not produce its own products directly but partners with more than 25 certified dairy farms in Australia, where suppliers handle the production. Additionally, its instant formula products are manufactured in New Zealand by its supply partner, Snellett Milk.
A key selling point of A2 milk is its claimed health benefits, particularly its easier digestibility compared to regular milk. This makes it a suitable option for those who usually experience digestive issues with standard milk.
Key measurements
For investors, A2M’s Revenue, Gross Marginand profit Can provide valuable insight into company performance.
A2M last reported annual revenue of 61,673m with a Compound Annual Growth Rate (CAGR) 11.6% every year for the last 3 years. Although absolute numbers are useful to know, the important thing is that trend. We want to see consistent, upward momentum in revenue.
Gross margin measures profitability before overhead costs are taken into account – it reflects the strength of a company’s core business operations. A2M’s latest reported gross margin stood at 45.8%.
Finally, the number we are most interested in – profit. Last financial year A2 Milk Company Limited reported a profit of $168 million. Three years ago they made a profit of 81 million, representing a CAGR of 27.6%.
Financial health of A2M shares
Profit is important, but just as important Capital health We want to know about the company’s leverage, their ability to pay debts, and their ability to generate a return on assets. One measure we can look at is Net debt. It is simply the company’s cash holdings minus total debt.
A2 Milk Company Limited’s net debt currently sits at -903M. A negative value here indicates that the company has more assets than debt, suggesting that A2M is in a strong financial position.
Another figure we can look at is Debt/Equity Percentage. It tells us how much debt the company has compared to shareholders’ equity – also known as leverage. A2M is more equity than debt, with a debt/equity ratio of 5.3%.
Finally, we can see Return on Equity (ROE). ROE tells us how efficiently a company is converting shareholders’ equity into profits – a high number indicates that the company is generating a lot of value for investors, while a low number raises concerns that capital is not necessarily being allocated efficiently. A2M generated an ROE of 12.8% in FY24.
What make A2M shares?
https://www.youtube.com/watch?v=pn2pklQKJSS
With strong revenue growth over the past 3 years, an upward trend in profitability, and a solid ROE, A2M’s share price may be worth watching in 2025.
Please keep in mind that this should only be the beginning of your research. The quality of the company is one thing, but making sure that the price is reasonable. There are many ways you can try to value a company. If you want to learn more about the value of share prices, you can sign up for one of our many free online investing courses.
