Shares of Downer EDI Ltd (DOW.AX) are moving on volatility today -0.14% or -0.01 from the open. The ASX listed company saw a recent bid of 7.06 on 1759788 volume.
Although the investing process is fairly straightforward, securing consistent returns in the stock market is not easy. Throwing hard earned money at un-researched investments can eventually lead the investor down the road to ruin. Every individual investor may have different goals when starting out. Aligning these goals with a specific plan can create a solid foundation for the future. Nobody can predict what the future will hold, but being aware of market conditions can be a great asset when attempting to navigate the terrain while mitigating risk. Once the vision of the individual investor is clear, the road to sustaining profits may be much easier to travel.
Now let’s take a look at how the fundamentals are stacking up for Downer EDI Ltd (DOW.AX). Fundamental analysis takes into consideration market, industry and stock conditions to help determine if the shares are correctly valued. Downer EDI Ltd currently has a yearly EPS of 0.36. This number is derived from the total net income divided by shares outstanding. In other words, EPS reveals how profitable a company is on a share owner basis.
Turning to Return on Assets or ROA, Downer EDI Ltd (DOW.AX) has a current ROA of 3.45. This is a profitability ratio that measures net income generated from total company assets during a given period. This ratio reveals how quick a company can turn it’s assets into profits. In other words, the ratio provides insight into the profitability of a firm’s assets. The ratio is calculated by dividing total net income by the average total assets. A higher ROA compared to peers in the same industry, would suggest that company management is able to effectively generate profits from their assets. Similar to the other ratios, a lower number might raise red flags about management’s ability when compared to other companies in a similar sector.
Another key indicator that can help investors determine if a stock might be a quality investment is the Return on Equity or ROE. Downer EDI Ltd (DOW.AX) currently has Return on Equity of 7.40. ROE is a ratio that measures profits generated from the investments received from shareholders. In other words, the ratio reveals how effective the firm is at turning shareholder investment into company profits. A company with high ROE typically reflects well on management and how well a company is run at a high level. A firm with a lower ROE might encourage potential investors to dig further to see why profits aren’t being generated from shareholder money.
As company earnings reports continue to tickle in, investors will be watching to see which companies hit their numbers for the last reporting period. Investors will also be watching which sectors are reporting the best earnings numbers. A positive overall earnings season could mean that the stock market could keep climbing. Many investors may be cautious with the market trading at current levels. Even though the gloom and doom prognosticators are out in full force, investors have to do the research and decide for themselves which way they believe the market will move in the next couple of months.