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Downer EDI Limited
Industrials · Engineering & Construction
Updated 17 hours ago
$7.77
MARKET CAP
$5.15B
P/E RATIO
38.0
DIV. YIELD
3.5%
FRANKING
30%
Downer EDI Limited operates as an integrated facilities management services provider in Australia, New Zealand, and internationally. It operates through Transport; Energy & Utilities; and Facilities segments.
View full descriptionThe Warsi Rating combines two proven approaches: value investing principles and dividend strategy. A stock must score 70+ on both to be rated Solid or higher.
$10.59
Discounted cash flow estimate
$3.13
For 6% dividend yield
Business quality and balance-sheet durability.
How much the company owes vs. what it owns
Acceptable. Debt level (0.75) is within this Buffett-inspired framework's limit of 1.
Current Snapshot
Current D/E
0.75x
Industry Limit
1.00x
Headroom
+0.25x
Why It Matters
Debt-to-equity shows balance-sheet risk. Lower leverage usually means more flexibility when earnings soften.
Formula
Total Debt / Shareholders' EquityMethod
Compare current D/E against the industry threshold used in the scoring framework, then assess remaining headroom.
Worked Example
This company's D/E is 0.75, meaning it carries 75 cents of debt for every $1 of equity. The industrials & services limit is 1.00, leaving 0.25 of headroom.
How to Interpret
Lower values generally imply lower refinancing pressure and lower dividend stress in downturns.
Low debt means this company isn't at risk of cutting dividends to service loans during downturns. Your income stream is protected by a strong balance sheet.
Sources
Profit after production costs, before overhead
Real cash left after running the business
Positive cash generation. Company produces real cash after capital expenditures - can fund dividends, buybacks, or growth.
Current Snapshot
Current FCF
$440M
Pass Rule
> $0
Status
Positive
Why It Matters
Free cash flow is the cash available after core operating and capital needs. It is central to dividend capacity.
Formula
Operating Cash Flow - Capital ExpendituresMethod
Review whether free cash flow is consistently positive and whether it is sufficient relative to dividends and debt needs.
Worked Example
This company generated $440M in free cash flow — cash left after operating costs and capital expenditure. Positive FCF means dividends are funded by real cash generation.
How to Interpret
Persistently negative free cash flow can force reliance on borrowing or equity issuance to maintain payouts.
Positive cash flow means dividends are funded by actual money, not accounting profits. As Buffett says, "Cash is fact, profit is opinion." Your income is backed by real cash generation.
Sources
Profit generated per $1 of shareholder investment
Short-term assets vs. short-term debts
Price versus estimated intrinsic value and required return thresholds.
What percentage of the stock price comes back as earnings each year
Consistency of profits over time
Is the business growing — and is debt being managed responsibly?
Revenue and debt both growing — check whether debt is funding productive growth or covering shortfalls. Sustainable dividends require revenue to outpace debt over time.
Current Snapshot
Revenue Change
+53.7%
Debt Change
+132.4%
Trend State
Mixed
Why It Matters
Revenue trend shows whether the business is expanding or contracting. Debt trend adds context on whether growth is being funded conservatively.
Formula
Revenue Change (%) = (Latest Revenue - Earliest Revenue) / |Earliest Revenue| x 100; Debt Change (%) = (Latest Debt - Earliest Debt) / |Earliest Debt| x 100Method
Map annual revenue history and, where relevant, annual debt history. For financial companies, debt is excluded because deposits and reserves distort this signal.
Worked Example
Revenue changed by +53.7% across the displayed period, while debt changed by +132.4%.
How to Interpret
Rising revenue with stable or falling debt is typically stronger than rising revenue funded by rapidly rising leverage.
Revenue and debt both growing — check whether debt is funding productive growth or covering shortfalls. Sustainable dividends require revenue to outpace debt over time.
Sources
Annual dividends as percentage of stock price
2.42% yield is well below the 6% target. Not suitable for Barsi's income strategy.
Current Snapshot
6Y Avg Yield
2.4%
6% Requirement
6.0%
Gross Yield
2.7%
Why It Matters
Yield translates dividend income into a percentage of the price paid, which is central to income-first screening.
Formula
Annual Dividends per Share / Stock Price x 100Method
Use the 6-year average annual dividend for consistency and compare the result with the 6% framework requirement.
Worked Example
With a 6-year average annual dividend of $0.19 and a share price of $7.77, the Barsi yield is 2.4%. The minimum requirement is 6%. Including franking credits, the gross yield is 2.7%.
How to Interpret
Higher sustainable yield improves upfront income, but unusually high yields may reflect elevated risk or weak coverage.
Low yield means you need significant capital to generate meaningful income. Barsi's strategy focuses on stocks that provide substantial cash flow from day one.
Sources
Track record of consistent dividend payments
| Ex-Date | Pay Date | Gross | Franking | Net | Credit |
|---|---|---|---|---|---|
| ~3 Sept 2026Est | ~2 Oct 2026 | ~$0.14 | 81% | ~$0.10 | $0.04 |
| ~8 Mar 2027Est | ~2 Apr 2027 | ~$0.11 | 81% | ~$0.08 | $0.03 |
Highest price to lock in 6% yield
Industry category of the business
Industrials is not a BESST sector. Non-BESST stocks receive a lower base score but can still qualify with exceptional dividend metrics.
Current Snapshot
Industry
Engineering & Construction
BESST Match
No
Score Impact
No bonus
Why It Matters
Sector classification helps contextualise risk and demand durability, which can materially affect dividend stability.
Formula
BESST Match = Sector in {Banks, Energy, Sanitation, Insurance, Telecom}Method
Match company sector or industry against BESST categories. A match adds scoring support but does not replace core dividend checks.
Worked Example
This company operates in Engineering & Construction (Industrials sector). It does not match a BESST sector, so it receives the standard base score. Non-BESST stocks can still qualify with strong dividend metrics.
How to Interpret
Sources
How much of a company's earnings are paid out as dividends
The company is paying out more in dividends than it earns (103%). This is unsustainable long-term and often signals a dividend cut ahead. An inflated payout also distorts the price ceiling calculation used in our analysis.
Current Snapshot
Latest Ratio
103.3%
Healthy Range
30%-75%
Zone
Unsustainable
Why It Matters
Payout ratio links dividends to earnings capacity and helps evaluate whether current distributions are likely to remain supportable.
Formula
Payout Ratio (%) = (Annual Dividend per Share / Earnings per Share) x 100Method
Calculate year-by-year payout ratios where EPS is positive, classify each year by sustainability zone, and compare with the current TTM ratio.
Worked Example
$0.25 dividend / $0.20 EPS equals 122.1% payout ratio.
How to Interpret
Ratios in the middle range are usually more sustainable than very high ratios. Values above 100% indicate dividends exceeded earnings in that period.
The company is paying out more in dividends than it earns (103%). This is unsustainable long-term and often signals a dividend cut ahead. An inflated payout also distorts the price ceiling calculation used in our analysis.
Sources
Downer EDI Limited operates as an integrated facilities management services provider in Australia, New Zealand, and internationally. It operates through Transport; Energy & Utilities; and Facilities segments. The Transport segment offers road network management; routine road maintenance; asset management systems; spray sealing; asphalt laying; landfill diversion solutions; rollingstock to infrastructure services; and building and construction solutions, such as signalling, track and station works, bridges, airports, and roads. This segment also manufacturing and supply of bitumen-based and asphalt products; and designs and manufactures life-support services comprising fleet maintenance, operations, and comprehensive overhaul of assets.
The Energy & Utilities segment operates power, gas, water, telecommunications, industrial, resources, and energy businesses, which includes planning, designing, constructing, operating, maintaining, managing, and decommissioning of power, gas network assets, and mineral process equipment; and designs and manufactures mineral process equipment. This segment also offers water lifecycle solutions for municipal and industrial water users, including water and wastewater treatment; network construction and rehabilitation services; end-to-end technology and communications solutions; maintenance shutdowns; turnaround and outrage delivery. The Facilities segment provides outsourced facilities comprising lifecycle of strategic assets ranging from maintenance and operational support to expansion and frontline service delivery; asset management; and consulting services to education, health, government, and defence. Downer EDI Limited was incorporated in 1989 and is headquartered in Sydney, Australia.
Who owns the company's shares and how much leadership has at stake
Leadership has very little personal money riding on the stock price
Large fund blocks can amplify price swings unrelated to business quality
Shares freely traded on the ASX by individual investors like you
Most shares are held by fund managers (80.8%), while company leadership owns very little (0.7%). This means management’s personal wealth isn’t significantly tied to the stock price. Value investors often prefer companies where leaders have meaningful personal investment — it keeps incentives aligned.
Current Snapshot
Insider %
0.7%
Institutional %
80.8%
Float %
18.5%
Why It Matters
Ownership mix affects governance incentives, liquidity, and share-price behaviour under large portfolio rebalancing flows.
Formula
Public Float (%) = 100 - Insider Ownership (%) - Institutional Ownership (%)Method
Use reported ownership percentages, convert to percentage terms, and compute remaining public float as the residual.
Worked Example
If insiders own 0.7% and institutions own 80.8%, public float is 18.5%.
How to Interpret
Higher insider ownership can improve alignment of incentives, while dominant institutional concentration can amplify short-term price moves.
Most shares are held by fund managers (80.8%), while company leadership owns very little (0.7%). This means management’s personal wealth isn’t significantly tied to the stock price. Value investors often prefer companies where leaders have meaningful personal investment — it keeps incentives aligned.
Sources
| Date | Insider | Type | Shares | Value |
|---|---|---|---|---|
| 6 Mar 2026 | Carey (Annette) Independent Non-Executive Director | Purchase at price 5.63 per share. | 10K | $56K |
| 26 Nov 2025 | Broadbent (Sheridan) Independent Non-Executive Director | Purchase at price 0.00 per share. | 5K | $5 |
| 26 Sept 2025 | Tompkins (Peter) Chief Executive Officer | Other at price 4.73 per share. | 15K | $73K |
| 16 Sept 2025 | Barker (Peter A.) Independent Non-Executive Director | Purchase at price 4.82 per share. | 17K | $80K |
| 15 Sept 2025 | Broadbent (Sheridan) Independent Non-Executive Director | Purchase at price 4.81 per share. | 10K | $48K |
Company insiders have been net buyers of shares over the past 12 months. This may indicate management confidence in future prospects.
Market data sourced from third-party financial data providers. Analysis generated using Warsi Criteria — proprietary scoring algorithms for value investing and dividend income analysis. Not financial advice. Learn how we analyse stocks →
Exceptional 87.3% margins indicate strong pricing power and brand value.
Current Snapshot
10Y Avg
87.3%
Threshold
40%
Worst Year
86.3%
Why It Matters
Gross margin indicates how much room a business has to absorb costs and still generate profit.
Formula
(Revenue - Cost of Goods Sold) / Revenue x 100Method
Assess both the long-term average and the weakest year. The framework checks for both level and consistency.
Worked Example
This company's 10-year average gross margin is 87.3% — it keeps 87 cents of every revenue dollar after production costs. The threshold is 40%, and the weakest year was 86.3%.
How to Interpret
Sustained high margins usually support durability. Sharp margin swings can signal weaker control or cyclical pressure.
Exceptional margins mean the company has strong pricing power - customers pay premium prices even when cheaper alternatives exist. This buffer protects profits (and dividends) even if costs rise.
Sources
4.4% average is below the 15% threshold. This suggests the business may lack a durable competitive advantage.
Current Snapshot
10Y Avg
4.4%
Threshold
15.0%
Worst Year
-16.8%
Why It Matters
ROE shows how effectively management turns shareholder capital into profit. High and stable ROE can signal pricing power, cost discipline, or both.
Formula
Net Income / Shareholders' Equity x 100Method
Use the 10-year average ROE and review the weakest year to check whether returns stayed resilient across cycles.
Worked Example
This company's 10-year average ROE is 4.4%, meaning each $1 of shareholder equity generates $0.04 in annual profit. The threshold is 15%, and the worst single year was -16.8%.
How to Interpret
Higher and steadier ROE generally supports stronger long-term compounding. Large drawdowns in weak years can point to fragility.
Lower ROE means your investment compounds more slowly. At 4.4%, this business needs more capital to generate the same returns as competitors. Consider whether other strengths (yield, stability) compensate for weaker profitability.
Sources
Current ratio of 0.91 is below 1.0 - company may struggle to pay short-term obligations.
Current Snapshot
Current Ratio
0.91x
Warning Floor
1.00x
Target
1.50x
Why It Matters
Liquidity supports operational stability. Companies with weak liquidity can face pressure even when long-term fundamentals are sound.
Formula
Current Assets / Current LiabilitiesMethod
Compare the current ratio to the warning floor and target level used in the framework.
Worked Example
This company's current ratio is 0.91x — it has $0.91 in short-term assets for every $1 of short-term liabilities. The target is 1.5x, with a warning floor at 1.0x.
How to Interpret
Ratios above the target suggest healthier short-term resilience; ratios below 1.0x can indicate immediate funding risk.
Tight liquidity means the company may need to borrow or sell assets to pay bills. Dividends are often the first expense cut when cash runs low.
Sources
2.6% earnings yield is below the 7.5% threshold. You'd earn nearly as much from safer government bonds, which means the extra risk of owning shares isn't being compensated.
Current Snapshot
Current Yield
2.6%
Required Yield
7.5%
Spread
-4.9pp
Why It Matters
Earnings yield reframes valuation as return on price paid. It helps compare equity earnings power against lower-risk alternatives.
Formula
(Earnings per Share / Stock Price) x 100Method
Calculate current earnings yield, then compare it to the required yield for the stock's industry setting.
Worked Example
With EPS of $0.20 and a share price of $7.77, earnings yield is 2.6%. The required yield for this industry is 7.5% (based on 4.5% government bond rate plus a risk premium).
How to Interpret
A yield above the required level suggests better valuation support; below it indicates thinner compensation for equity risk.
Returns don't justify the added risk compared to safe bonds. Consider whether the dividend yield alone compensates, or wait for a better price.
Sources
How current price compares with estimated intrinsic value
Stock is trading 5% ABOVE the fair-value threshold (includes 30% margin of safety), but still below the estimated intrinsic value.
Current Snapshot
Current Margin
26.6%
Industry Threshold
30%
Status
5% Above Fair Value
Why It Matters
Margin of safety provides a valuation buffer against modelling uncertainty and adverse business outcomes.
Formula
(Estimated Intrinsic Value per Share - Current Price) / Estimated Intrinsic Value per Share x 100Method
Estimate intrinsic value using a two-stage DCF (10-year projection plus terminal value), then compare with current price.
Worked Example
For this stock now: intrinsic value is $10.59 per share, current price is $7.77, and margin of safety is 26.6%.
How to Interpret
Positive margin indicates price below modelled value; negative margin indicates price above modelled value. Compare against the industry's required buffer.
Price remains below the intrinsic value estimate but above your required threshold. Under this methodology, the valuation buffer is thinner, so estimate error and volatility have a larger impact.
Sources
8 positive EPS years meets predictability requirement. Buffett can forecast this business. (systemic event loss year(s) excluded — post-event recovery confirmed)
Current Snapshot
Positive Years
8/10
Allowed Losses
1
EPS CAGR
-7.4%
Why It Matters
Consistency in EPS helps distinguish resilient earnings power from one-off performance spikes.
Formula
Positive EPS Years / Available EPS YearsMethod
For 8+ years of data, apply industry-specific loss tolerance. For limited data, every available year must be positive.
Worked Example
This company reported positive earnings in 8 of the last 10 years, with 1 loss year. The allowed loss tolerance for this industry is 1 year. EPS growth rate (CAGR) is -7.4%.
How to Interpret
Fewer loss years and stronger EPS continuity generally improve confidence in future dividend and valuation assumptions.
Consistent profits mean predictable dividends. You can forecast your income with confidence - this company has proven it can generate earnings reliably.
Sources
Percentage of revenue that becomes profit after all expenses
1.3% net margin is below the 8% threshold. May reflect this sector's structural characteristics.
Current Snapshot
Current Margin
1.3%
Threshold
8.0%
Relative Position
-6.7%
Why It Matters
Net income margin shows how much profit the business keeps from each dollar of revenue after all costs.
Formula
Net Income / Total Revenue x 100Method
Compare current margin with the industry-specific threshold to avoid cross-sector distortions.
Worked Example
This company's net income margin is 1.3% — it keeps 1 cents of every revenue dollar as profit after all expenses. The industrials & services threshold is 8%, putting it 6.7% below the requirement.
How to Interpret
Margins that are both strong and stable can indicate competitive strength; persistent weakness may limit reinvestment and payout capacity.
Lower margins in this sector are common, but they leave less cushion if costs rise or revenue drops. Monitor whether margins are stable over time — consistency matters more than the absolute level.
Sources
How efficiently the company turns money into profit
5.0% ROIC is below the 11.0% threshold. Company may not be earning enough to justify the money invested in it.
Current Snapshot
5Y Avg
5.0%
Threshold
11.0%
WACC Delta
-4.0pp
Why It Matters
ROIC measures capital efficiency. Businesses that repeatedly earn above their funding cost can compound value more effectively.
Formula
After-Tax Operating Profit / Invested Capital x 100Method
Use the 5-year average ROIC and compare it with industry WACC plus the required spread in this framework.
Worked Example
This company's 5-year average ROIC is 5.0%, with a cost of capital (WACC) of 9.0%. The -4.0pp gap below WACC suggests it may be destroying value on each dollar invested.
How to Interpret
A healthy spread above WACC suggests value creation; a narrow or negative spread points to weaker capital efficiency.
Returns below the cost of borrowing mean the business destroys value over time. This can erode the foundation that supports dividends — proceed with caution.
Sources
| Ex-Date | Pay Date | Gross | Franking | Net | Credit |
|---|---|---|---|---|---|
| 3 Mar 2026Interim | 2 Apr 2026 | $0.18 | 100% | $0.13 | $0.06 |
| 3 Sept 2025Final | 2 Oct 2025 | $0.20 | 100% | $0.14 | $0.06 |
| 26 Feb 2025Interim | 2 Apr 2025 | $0.14 | 75% | $0.11 | $0.03 |
| 13 Sept 2024Final | 18 Oct 2024 | $0.13 | 50% | $0.11 | $0.02 |
| 13 Mar 2024Interim | 11 Apr 2024 | $0.06 | 0% | $0.06 | $0.00 |
| 23 Aug 2023Final | 27 Sept 2023 | $0.08 | 0% | $0.08 | $0.00 |
| 10 Mar 2023Interim | 11 Apr 2023 | $0.05 | 0% | $0.05 | $0.00 |
| 30 Aug 2022Final | 28 Sept 2022 | $0.12 | 0% | $0.12 | $0.00 |
| 23 Feb 2022Interim | 24 Mar 2022 | $0.12 | 0% | $0.12 | $0.00 |
| 25 Aug 2021Final | 29 Sept 2021 | $0.12 | 0% | $0.12 | $0.00 |
Excellent track record. 11 years of consistent dividends through multiple market cycles.
Current Snapshot
History
11yr
Predictability
Moderate
Payout Health
High risk
Why It Matters
Payment consistency is a direct test of dividend reliability. Large cuts or skips often appear before confidence recovers.
Formula
Consecutive Years = count of years with dividend payments and no disqualifying skip/cut eventsMethod
Require at least 6 years of history, then check for skipped years and large cuts, allowing approved systemic-event exceptions.
Worked Example
This company has 11 years of dividend history (2016–2026). No suspensions detected — 11 consecutive years of payments. Predictability: Moderate. Payout health: High risk. The minimum requirement is 6 years.
How to Interpret
Longer uninterrupted records generally signal stronger income reliability than high yield alone.
A 11-year track record through multiple economic cycles gives confidence your income will continue. This company has proven it prioritises shareholder returns.
Sources
Current price ($7.77) is 148% above the ceiling. Wait for a drop to lock in 6% yield.
Current Snapshot
Current Price
$7.77
Max Buy Price
$3.13
Delta
-148.2%
Why It Matters
The price ceiling links valuation discipline to income targets by defining the price that aligns with a 6% yield target.
Formula
6-Year Average Annual Dividend / 0.06Method
Use the 6-year average dividend (not one year) and divide by 0.06 to estimate the maximum entry price for target yield.
Worked Example
With a current price of $7.77 and a ceiling of $3.13, the entry is 148.2% above the ceiling.
How to Interpret
Prices below the ceiling imply a historical yield above 6%; prices above it imply a lower historical yield at entry.
At this price, you won't achieve Barsi's target 6% yield. Consider waiting for a pullback — market volatility often creates more favourable valuations for patient investors.
Sources
BESST alignment is a positive context signal. Non-BESST stocks can still qualify with strong yield and dividend consistency.
Non-essential businesses face demand drops during recessions — discretionary spending is first to be cut. This increases cyclical risk for dividends, but companies with decades of consistent payments can still demonstrate durability.
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