Assessing Australian Foundation Investment’s Valuation After Half Year Profit Decline And New Buyback Program

Simply Wall St.

Jan 26

AdvertisementWhy AFIC’s latest earnings, dividend and buyback matter for investors Australian Foundation Investment (ASX:AFI) has just reported its half year result with profit softer than a year ...

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This gives investors several moving parts to weigh up around income, capital management and AFIC’s long term investment...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"AFI.AU":"AUSTRALIAN FOUNDATION INV CO","XJO.AU":"标普/澳交所 200指数","XAO.AU":"标普/澳交所 普通股指数","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","XKO.AU":"标普/澳交所 300指数"},"translate_title":"评估澳大利亚基金会投资半年利润下降和新回购计划后的估值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XAO.AU":1.5,"DCF":1,"XJO.AU":1.5,"XKO.AU":1.5,"AFI.AU":1},"content_text":"AdvertisementWhy AFIC’s latest earnings, dividend and buyback matter for investors Australian Foundation Investment (ASX:AFI) has just reported its half year result with profit softer than a year earlier, while at the same time confirming a fully franked interim dividend and a special payout to shareholders. The Board has also approved a buyback that covers up to 8.93% of issued capital. This gives investors several moving parts to weigh up around income, capital management and AFIC’s long term investment approach. See our latest analysis for Australian Foundation Investment. AFIC’s recent dividend increase and the newly authorised buyback have come as the share price has softened over the past quarter, with a 90 day share price return of 2.98% decline and a 1 year total shareholder return of 1.76% decline. This suggests momentum has been fading even as the Board leans into capital management to support investor confidence. If AFIC’s mix of dividends and buybacks has you thinking about where else capital might work hard, it could be a good time to broaden your view with fast growing stocks with high insider ownership. With profit and portfolio returns softer, yet a fully franked dividend, special payout and sizeable buyback all on the table, is AFIC quietly offering value today or is the market already pricing in its future growth? Preferred P/E of 32.3x, is it justified? AFIC currently trades on a P/E of 32.3x, which lines up with a share price of A$7.16 and raises questions about how the market is treating its earnings stream. The P/E ratio compares the share price to earnings per share, so a higher P/E often means investors are willing to pay more today for each dollar of profit. For an investment company like AFIC, that can reflect how investors view the quality and stability of its earnings, as well as expectations about the long term portfolio performance that drives those earnings. Against its closest peer group, AFIC screens as good value compared with similar companies, where the peer average multiple sits at 75.9x earnings. However, compared with the broader Australian Capital Markets industry on 21.2x, AFIC looks more expensive, which suggests investors may be treating it differently to the wider sector. That tension between being cheaper than peers yet richer than the industry average is what many investors will focus on when deciding whether this P/E feels comfortable. See what the numbers say about this price — find out in our valuation breakdown. Result: Price-to-earnings of 32.3x (ABOUT RIGHT) However, the recent 90-day share price return decline of 2.98% and 1-year total return decline of 1.76% could signal weaker sentiment that challenges this valuation. Find out about the key risks to this Australian Foundation Investment narrative. Another angle from our DCF model While the 32.3x P/E suggests AFIC is roughly in line with what the market is currently paying for its earnings, our DCF model points in a very different direction. On this view, the shares at A$7.16 sit well above an estimated future cash flow value of A$0.44, which implies a wide gap between price and intrinsic value. For you as an investor, that kind of disconnect can either signal caution or a belief that the model is missing key parts of AFIC’s story. Which side of that fence do you sit on? Look into how the SWS DCF model arrives at its fair value. AFI Discounted Cash Flow as at Jan 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Australian Foundation Investment for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 874 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.  Build Your Own Australian Foundation Investment Narrative If you see the numbers differently or prefer to work from your own assumptions, you can quickly build a personalised AFIC story in just a few minutes: Do it your way. A great starting point for your Australian Foundation Investment research is our analysis highlighting 1 important warning sign that could impact your investment decision. Looking for more investment ideas? If AFIC has sharpened your focus, do not stop here. Use the Simply Wall St Screener to spot other opportunities that could fit your portfolio before others do.  Target higher income potential by scanning for these 13 dividend stocks with yields > 3% that might complement AFIC’s payouts in your portfolio. Get ahead of the next big tech shift by tracking these 23 AI penny stocks that are tied to real business models, not just hype. Position yourself early in emerging trends by assessing these 18 cryptocurrency and blockchain stocks linked to blockchain, payments and digital assets.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"shareholding","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}