Assessing Downer EDI’s Valuation As Macquarie Takes 5% Stake And Buy Back Activity Continues

Simply Wall St.

May 21

Macquarie Group’s move to build a 5% holding in Downer EDI (ASX:DOW), alongside the company’s ongoing on market share buy back, has drawn fresh attention to how investors assess this infrastructure ...

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However, a 3 year total shareholder return of 137.35%...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7064":"综合支持服务","BK7046":"综合性资本市场","DOW.AU":"DOWNER EDI LTD","MQG.AU":"Macquarie","BK7511":"ESG概念"},"translate_title":"随着麦格理持有5%股份且回购活动仍在继续，评估Downer EDI的估值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DOW.AU":1,"MQG.AU":1.5,"EDI":1.5},"content_text":"Macquarie Group’s move to build a 5% holding in Downer EDI (ASX:DOW), alongside the company’s ongoing on market share buy back, has drawn fresh attention to how investors assess this infrastructure services stock. See our latest analysis for Downer EDI. Macquarie’s 5% stake and the ongoing buy back come at a time when the share price has slipped since the start of the year, with a year to date share price return of a 5.26% decline. However, a 3 year total shareholder return of 137.35% indicates that longer term holders have seen a very strong outcome. If this kind of renewed interest in infrastructure services has your attention, it could be a good moment to widen your search with 35 power grid technology and infrastructure stocks With Macquarie on the register, an active buy back in place and the stock still down year to date, is Downer trading below what its fundamentals suggest or has the market already priced in the company’s next phase of growth? AdvertisementMost Popular Narrative: 8.3% Undervalued Downer EDI’s most followed valuation narrative places fair value at A$8.24 per share, compared with a last close of A$7.56, which implies a modest discount built into today’s price.  The analysts have a consensus price target of A$8.24 for Downer EDI based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$9.2, and the most bearish reporting a price target of just A$6.8.  Read the complete narrative. Want to see what is sitting underneath that fair value anchor? The narrative leans heavily on rising earnings, firmer margins and a specific profit multiple that has been carefully modelled off those forecasts. Result: Fair Value of A$8.24 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this hinges on the turnaround staying on track, with any slip in execution or weaker government and infrastructure spending likely to quickly challenge the current valuation story. Find out about the key risks to this Downer EDI narrative. Another View, Rich Multiples Signal Less Obvious Value Analysts see Downer EDI as about 8.3% undervalued at A$8.24, but the current P/E of 33.5x is higher than both the global Commercial Services average of 16.1x and the peer average of 23.4x, and above a fair ratio of 29x, which points to valuation risk instead of a clear bargain. For investors, that gap means paying a higher price for each dollar of current earnings. The key question is whether the forecast profit growth and turnaround justify staying above that fair ratio in the years ahead, or if the multiple could drift closer to peers and the fair value anchor. See what the numbers say about this price — find out in our valuation breakdown. ASX:DOW P/E Ratio as at May 2026Next Steps Torn between the bullish fair value story and the richer P/E multiple? Act quickly, review the numbers for yourself, and weigh both the potential upsides and the risks using 3 key rewards and 2 important warning signs Looking for more investment ideas? Once you have a view on Downer EDI, do not stop there. Widen your opportunity set and let high quality shortlists help you focus your research.  Prioritise resilience by checking out 6 resilient stocks with low risk scores that may help you focus on companies where risk indicators appear more muted. Target quality at a sensible entry point by scanning 10 high quality undervalued stocks that combine stronger fundamentals with what may be appealing prices. Stay ahead of the crowd by reviewing screener containing 12 high quality undiscovered gems before attention potentially shifts toward these under followed stocks.   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":false,"editions":null,"column":"","sentiment":"1","news_tag":"shareholding","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}