In this analysis, we delve into the prospects of Aurizon Holdings (ASX:AZJ) and its anticipated performance in the upcoming fiscal years. While the company shows promising signs of robust EBITDA growth in FY24 and onwards, there are certain factors that might hinder its potential. Here, we examine the growth trajectory, dividend projections, and overall investment outlook for Aurizon Holdings.
Growth Projections
We anticipate Aurizon Holdings to exhibit significant EBITDA growth throughout FY24, with continued albeit slightly subdued growth in FY25-26. However, it's crucial to note that the potential escalation in debt service obligations might not be fully acknowledged in current market assessments.
Financial Outlook
Our analysis suggests a mid-teen compound growth in both earnings per share (EPS) and dividends per share (DPS) across FY24-26F. Notably, our forecast for FY26F dividends implies a noteworthy 7.1% cash yield at present prices, compared to 4.7% for FY24F. This signifies an attractive dividend proposition for investors considering Aurizon Holdings.
Investment Insights
Given the current market dynamics and our price target (accessible with login), we maintain a recommendation to HOLD Aurizon Holdings at current price levels. This stance is supported by the approximate 6% potential Total Shareholder Return (TSR) anticipated.
In conclusion, while Aurizon Holdings presents a solid growth narrative, it's essential for investors to consider the underlying factors, such as debt service obligations, before making investment decisions. With careful analysis and monitoring, Aurizon Holdings could still present an attractive investment opportunity despite the current pricing dynamics.
