Downer EDI Limited (DOW) AI Stock Analysis

• Market Cap: €4.55B
• Dividend Yield: 3.18%
• Average Volume (3M): 1.26M
• Price to Earnings (P/E): 63.1
• Beta (1Y): 0.79
• Revenue Growth: -7.32%
• EPS Growth: N/A
• Country: AU
• Employees: 26,000
• Sector: Industrials
• Sector Strength: 90
• Industry: Engineering & Construction
• EPS (TTM): 0.18
• Shares Outstanding: 671,573,670
• 10 Day Avg. Volume: 1,028,770
• 30 Day Avg. Volume: 1,261,637
• PEG Ratio: 6.93
• Price to Book (P/B): 2.22
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 9.55
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €6.76
• Price Target Upside: -1.47% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 51 Neutral
• Price Target: AU$7.00 ▲(2.04%Upside)

The overall stock score reflects a strong financial foundation with improving profitability metrics and solid cash flow management. However, technical analysis signals overbought conditions, suggesting caution, and valuation metrics indicate potential overvaluation. Revenue decline also poses a risk to future performance.

Positive Factors

Cost Management

Management's emphasis on contracting discipline and delivering on cost out targets is seen as a prudent approach to turning the business around.

Earnings and Margins

A solid result, with EBITA margins increasing to 3.7%, provides evidence that the targets of higher margins are within reach.

Negative Factors

Stock Valuation

Following significant recent earnings revisions and stock price appreciation, the margin expansion story is almost fully priced in to the stock.

Downer EDI Limited Business Overview & Revenue Model

Company Description

Downer EDI Limited operates as an integrated facilities management services provider in Australia, New Zealand, and internationally. Its Transport segment provides road network management; routine road maintenance; asset management systems; spray sealing; asphalt laying; and manufacture and supply of bitumen-based products and asphalt products. This segment also engages in the design and construction of light and heavy rail networks, signaling works, track and station works, and bridges; and provides rail safety technology, fleet maintenance, and overhaul services. The company's Utilities segment plans, designs, constructs, operates, maintains, manages, and decommissions power and gas network assets; provides water and wastewater treatment, and network construction and rehabilitation services; and designs, constructs, and maintains renewable assets in the wind, solar, and power system storage sectors. This segment also offers technology and communications solutions, including design, civil construction, network construction, operation, and maintenance services for fiber, copper, and radio networks. Its Facilities segment offers outsourced facility services to a range of industry sectors, including defence, education, government, healthcare, resources, leisure, assets services, and hospitality; technical and engineering services; maintenance and asset management services, including shutdowns, turnaround, and outage delivery; operations maintenance, refrigeration solutions, and ongoing management of strategic assets; feasibility studies; engineering design; procurement and construction; and commissioning and decommissioning services. This segment also designs and manufactures mineral process equipment, as well as offers building and construction solutions. The company was incorporated in 1989 and is headquartered in Sydney, Australia.

How the Company Makes Money

Downer EDI Limited generates revenue through a diversified portfolio of services across multiple sectors. Its key revenue streams include long-term contracts for construction, maintenance, and operational services in transport infrastructure, such as rail and road networks, as well as utilities like power and water. The company also earns income from facilities management services, including healthcare, education, and government buildings. Strategic partnerships and joint ventures with public and private sector clients are significant contributors to its earnings, providing stability and growth opportunities. Additionally, Downer's focus on innovation and sustainability in service delivery enhances its value proposition and competitive edge in the market.

Downer EDI Limited Financial Statement Overview

Summary

Downer EDI Limited shows a generally improving financial position with strong cash flow management and better profitability metrics. Profitability has improved, though revenue decline is a concern. The balance sheet is stable with moderate leverage.

Income Statement

The income statement shows mixed performance with a current gross profit margin of 11.71% and an improved EBIT margin of 2.41%. The net profit margin has improved from a negative position last year to 0.63% this year, indicating a recovery. However, revenue growth rate is negative at -5.73%, signaling a decline in sales. Overall, profitability metrics have improved, but revenue decline is a concern.

Balance Sheet

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.87, indicating moderate leverage. The equity ratio stands at 29.47%, showing a solid reliance on equity financing. Return on equity has improved to 3.32% from a negative position last year. Overall, the balance sheet shows good stability, but the company should watch its leverage.

Cash Flow

Cash flow analysis indicates strong operational cash generation with an operating cash flow to net income ratio of 7.88. Free cash flow growth rate is robust at 620.65%, but the free cash flow to net income ratio is 5.76, indicating strong but not exceptional cash generation from profits. Overall, strong cash flows support the company's financial health.

Breakdown	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	10.97B	11.64B	10.95B	11.51B	12.66B
Gross Profit	1.28B	1.28B	1.21B	1.44B	1.43B
EBITDA	512.70M	60.70M	645.80M	806.90M	462.60M
Net Income	69.10M	-385.70M	151.60M	181.60M	-150.30M
Balance Sheet
Total Assets	7.06B	7.48B	7.64B	8.32B	8.84B
Cash, Cash Equivalents and Short-Term Investments	856.70M	889.10M	738.50M	811.40M	588.50M
Total Debt	1.81B	2.13B	1.91B	2.14B	2.81B
Total Liabilities	4.80B	5.19B	4.83B	5.36B	6.24B
Stockholders Equity	2.08B	2.29B	2.81B	2.95B	2.45B
Cash Flow
Free Cash Flow	397.80M	55.20M	215.60M	423.40M	-207.60M
Operating Cash Flow	544.10M	318.20M	495.40M	708.70M	158.60M
Investing Cash Flow	-29.30M	-86.70M	38.40M	35.90M	-377.70M
Financing Cash Flow	-566.60M	-80.70M	-600.20M	-523.20M	105.10M

Downer EDI Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6.86
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:DOW, the sentiment is Positive. The current price of 6.86 is above the 20-day moving average (MA) of 6.44, above the 50-day MA of 6.26, and above the 200-day MA of 5.65, indicating a bullish trend. The MACD of 0.17 indicates Negative momentum. The RSI at 78.11 is Negative, neither overbought nor oversold. The STOCH value of 95.71 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:DOW.

Downer EDI Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	65 Neutral	$10.86B	15.57	5.28%	1.92%	3.13%	-27.76%
DOW	51 Neutral	€4.55B	63.11	3.35%	3.18%	-7.32%	―
8MP	―	€1.00B	21.93	15.97%	3.65%	―	―
UFY	―	€676.91M	19.66	10.90%	2.54%	―	―
3NR	―	€807.57M	11.05	18.01%	4.43%	―	―
SRG	69 Neutral	AU$1.02B	24.21	11.36%	2.97%	25.40%	41.18%
MGH	67 Neutral	AU$1.48B	19.12	9.50%	1.72%	-1.30%	-7.78%

Downer EDI Limited Corporate Events

Downer EDI Limited Sells Stake in Keolis Downer Joint Venture

Downer EDI Limited announced the sale of its 49% interest in the Keolis Downer joint venture to Keolis Group for an enterprise value of $132 million. This divestment is part of Downer’s strategy to simplify its portfolio and focus on core markets, enhancing its balance sheet flexibility for future capital management initiatives. The transaction is expected to be completed by early 2026, pending regulatory approvals, and will not affect Downer’s ongoing rollingstock maintenance business.

The most recent analyst rating on (AU:DOW) stock is a Hold with a A$5.77 price target. To see the full list of analyst forecasts on Downer EDI Limited stock, see the AU:DOW Stock Forecast page.

Downer Secures $200 Million Contract Extension with AusNet

Downer EDI Limited has secured a three-year extension to its gas services contract with AusNet Services, valued at approximately $200 million. This extension, starting in April 2026, underscores Downer’s successful decade-long partnership with AusNet, highlighting its commitment to safety, efficiency, and reliability in managing AusNet’s gas distribution network, which serves over 790,000 customers.

The most recent analyst rating on (AU:DOW) stock is a Hold with a A$5.77 price target. To see the full list of analyst forecasts on Downer EDI Limited stock, see the AU:DOW Stock Forecast page.

Allan Gray Australia Reduces Stake in Downer EDI Limited

Allan Gray Australia Pty Ltd, an investment manager, has reduced its voting power in Downer EDI Limited from 9.18% to 8.14% as of June 25, 2025. This change in substantial holding may impact Downer’s shareholder composition and influence its strategic decisions, reflecting a shift in investment strategy by one of its significant stakeholders.

The most recent analyst rating on (AU:DOW) stock is a Hold with a A$5.77 price target. To see the full list of analyst forecasts on Downer EDI Limited stock, see the AU:DOW Stock Forecast page.

Downer EDI Completes $1 Billion Sustainability-Linked Loan Refinancing

Downer EDI Limited has successfully refinanced $1 billion of its $1.3 billion syndicated sustainability-linked loan facility, which includes four tranches with varying maturities. This refinancing is part of an overall review of funding and liquidity requirements and extends the company’s average debt maturity profile to approximately 3.4 years. The transaction, backed by major financial institutions, reflects Downer’s improved operating performance and strong financial position, providing flexibility for upcoming debt maturities.

The most recent analyst rating on (AU:DOW) stock is a Hold with a A$5.77 price target. To see the full list of analyst forecasts on Downer EDI Limited stock, see the AU:DOW Stock Forecast page.

Downer EDI Limited Announces Board Changes with New Appointments

Downer EDI Limited announced the retirement of Teresa Handicott as a Non-Executive Director, effective November 2025, after nine years of service. As part of its board renewal process, the company appointed Kerry Gleeson and Annette Carey as independent Non-Executive Directors, effective September and November 2025, respectively. These appointments bring extensive experience in the industrial, mining, logistics, and supply chain sectors, potentially enhancing Downer’s strategic direction and governance.

The most recent analyst rating on (AU:DOW) stock is a Hold with a A$5.77 price target. To see the full list of analyst forecasts on Downer EDI Limited stock, see the AU:DOW Stock Forecast page.

Downer EDI Sets New Dividend Rate for ROADS Preference Shares

Downer EDI Limited, through its subsidiary Works Finance (NZ) Limited, announced the dividend rate for its ROADS preference shares for the period from 15 June 2025 to 15 June 2026, set at 7.27% per annum. This rate is derived from the One Year Swap Rate of 3.22% plus a Step-up Margin of 4.05%. The dividends will continue to be fully imputed, and no action is required from the holders. This announcement reflects Downer’s ongoing commitment to providing stable returns to its stakeholders while maintaining its financial strategies.

The most recent analyst rating on (AU:DOW) stock is a Hold with a A$5.77 price target. To see the full list of analyst forecasts on Downer EDI Limited stock, see the AU:DOW Stock Forecast page.

Ubique Asset Management Reduces Stake in Downer EDI Limited

Ubique Asset Management Pty Ltd has reduced its substantial holding in Downer EDI Limited, decreasing its voting power from 9.69% to 8.49% through market trading and client-specific transfers. This change in shareholding could impact Downer’s market positioning and influence in shareholder decisions, reflecting a shift in stakeholder interests.

The most recent analyst rating on (AU:DOW) stock is a Hold with a A$5.77 price target. To see the full list of analyst forecasts on Downer EDI Limited stock, see the AU:DOW Stock Forecast page.

Perpetual Limited Increases Stake in Downer EDI Limited

Perpetual Limited and its related bodies corporate have increased their voting power in Downer EDI Limited from 5.537% to 6.613% as of May 7, 2025. This change in substantial holding indicates a strengthened position for Perpetual Limited within Downer EDI, potentially impacting the company’s governance and strategic decisions.

Downer EDI Finalizes Exit from Laundries Business

Downer EDI Limited has completed the divestment of its 29.9% interest in its Australian laundries business to a private equity fund managed by Macquarie Asset Management, finalizing its exit from the laundries sector. This strategic move aligns with Downer’s focus on portfolio simplification, allowing the company to concentrate on core markets with strong growth opportunities and enhance its balance sheet for future capital allocation initiatives.