The a2 Milk Company Limited
The a2 Milk Company Limited Fundamental Analysis
The a2 Milk Company Limited (ACOPF) shows moderate financial fundamentals with a PE ratio of 35.24, profit margin of 11.26%, and ROE of 15.87%. The company generates $2.0B in annual revenue with strong year-over-year growth of 13.50%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 68.0/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze ACOPF's fundamental strength across five key dimensions:
Efficiency Score
ExcellentACOPF demonstrates superior asset utilization.
Valuation Score
ModerateACOPF shows balanced valuation metrics.
Growth Score
ExcellentACOPF delivers strong and consistent growth momentum.
Financial Health Score
ExcellentACOPF maintains a strong and stable balance sheet.
Profitability Score
ModerateACOPF maintains healthy but balanced margins.
Key Financial Metrics
Is ACOPF Expensive or Cheap?
P/E Ratio
ACOPF trades at 35.24 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, ACOPF's PEG of 1.97 indicates fair valuation.
Price to Book
The market values The a2 Milk Company Limited at 5.73 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 23.04 times EBITDA. This signals the market has high growth expectations.
How Well Does ACOPF Make Money?
Net Profit Margin
For every $100 in sales, The a2 Milk Company Limited keeps $11.26 as profit after all expenses.
Operating Margin
Core operations generate 13.47 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $15.87 in profit for every $100 of shareholder equity.
ROA
The a2 Milk Company Limited generates $12.20 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
The a2 Milk Company Limited produces operating cash flow of $217.85M, showing steady but balanced cash generation.
Free Cash Flow
The a2 Milk Company Limited generates strong free cash flow of $207.24M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $0.29 in free cash annually.
FCF Yield
ACOPF converts 2.61% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
35.24
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
1.97
vs 25 benchmark
P/B Ratio
Price to book value ratio
5.73
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.97
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.02
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.96
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.16
vs 25 benchmark
ROA
Return on assets percentage
0.12
vs 25 benchmark
ROCE
Return on capital employed
0.19
vs 25 benchmark
How ACOPF Stacks Against Its Sector Peers
| Metric | ACOPF Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 35.24 | 23.25 | Worse (Expensive) |
| ROE | 15.87% | 1240.00% | Weak |
| Net Margin | 11.26% | -9728.00% (disorted) | Strong |
| Debt/Equity | 0.02 | 0.77 | Strong (Low Leverage) |
| Current Ratio | 2.96 | 2.54 | Strong Liquidity |
| ROA | 12.20% | -203388.00% (disorted) | Strong |
ACOPF outperforms its industry in 4 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews The a2 Milk Company Limited's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
11.65%
Industry Style: Defensive, Dividend, Low Volatility
High GrowthEPS CAGR
-46.50%
Industry Style: Defensive, Dividend, Low Volatility
DecliningFCF CAGR
-52.04%
Industry Style: Defensive, Dividend, Low Volatility
Declining