CSL share price in focus
Formerly a public company, CSL is today a publicly listed global biotechnology company that develops and delivers innovative medicines that save lives, protect public health, and help people with life-threatening medical conditions live fuller lives.
The company is divided into three primary business units: CSL Behring, CSL Seqirus And CSL Vifor. Behring, which was acquired in 2004, manufactures and distributes blood plasma products. Securis is responsible for manufacturing flu-related products and provides epidemiological services for governments. Finally, Vifor manufactures products for iron deficiency and nephrology (kidney/kidney care).
CSL has developed a strong reputation with Australian investors over the decades as a reliable company and a consistent dividend payer. With a steady increase in healthcare costs and consistent historical performance, interest in CSL shares is high today.
Key measurements
If you’ve ever tried to read a company’s income statement over an annual report, you know it can be very complicated. While there are several figures to draw you from this statement, three are key Revenue, Gross Marginand profit.
Income is important for obvious reasons – it all starts here. If you can’t collect revenue, you can’t generate profit. What we are concerned with is not so much the absolute number, but the trend. CSL last reported annual revenue of $14,800 million Compound Annual Growth Rate (CAGR) 12.8% every year for the last 3 years.
Moving down to the income statement, we then arrive at gross margin. Gross margin tells us how profitable the underlying product/service is – before you take overhead costs into account, how much money does the company make selling $100 worth of goods or services? CSL’s latest reported gross margin was 52.1%.
Finally, we get profit, which is the most important figure. Last financial year CSL Limited reported a profit of Rs 64 2,642m. This compares to 3 years ago when they made a profit of ₹2,375m, representing a CAGR of 3.6%.
Financial health of CSL shares
The next thing we need to consider is the capital ‘health’ of the company. What we are trying to assess here is whether they are generating a reasonable return on their equity (total shareholder value) and have a decent safety buffer. One measure we can look at is Net debt. It is simply the company’s cash holdings minus total debt. In CSL’s case, the current net debt, sits at 10,526m.
A high number here means that a company has a lot of debt, which potentially means higher interest payments, higher volatility, and higher sensitivity to interest rates. A negative value, on the other hand, indicates that the company has more cash than debt (a useful safety buffer).
However, the argument is more important Debt/Equity Percentage. It tells us how much the company owes to shareholders. In other words, how much profit is the company making? CSL’s debt/equity ratio is 62.8%, which means they have more equity than debt.
Finally, we can see Return on Equity (ROE). ROE tells us how much profit a company is earning as a percentage of its total equity – a high number indicates that the company is allocating capital well and creating value, while a low number indicates that the profits could represent more value if they were paid out to shareholders as dividends. CSL generated an ROE of 14.6% in FY24.
What to make of CSL shares?
https://www.youtube.com/watch?v=Qpuru-blkdc
With strong revenue growth over the past 3 years, an upward trend in profits, and a solid ROE, CSL shares may be worth adding to your ASX share price watch list.
Please keep in mind that these figures are important but should only be the beginning of your research. It is important to get a good grasp of the company’s financials and compare it to its peers. It is also very important to make sure that the company is priced fairly. For more information on the value of share prices, you can sign up for one of our many free online investment courses.
