Transurban Share Price Disappoints Despite an 850% Rise in Net Profit

Infrastructure company Transurban Group [ASX:TCL] dropped 1.67% this morning to $11.93 per share.

Why did the share price drop after a rise in profit?

This morning, Transurban released their full-year results for FY17.  The group generated revenues of $2.7 billion, 22.7% higher than FY16. Operating profits of $209 million was a huge lift from last year’s $22 million profit.

Thanks to the hike in earnings, dividends paid also improved from $689 million to $801 million. Transurban CEO Scott Charlton said the company is continuing to invest in the efficiency of its road network.

All projects under Transurban’s $9 billion development pipeline are on time and budget according to the company. Transurban also expects to team up with equity partners to bid for Sydney’s $16.8 billion WestConnex motorway.

What now for Transurban?

Transurban remains a reliable dividend payer. From 2012–17, Transurban improved their annual dividend from 30 cent to 51 cents per share. Over that same time, the stock has appreciated 112.7%.

However, the company isn’t without its problems. Their current liability and obligations payable within 12 months far exceed their current assets. The group also more than doubled its short-term debt in FY17. This will increase interest payments and could potentially decrease profitability in the near future.

If you’d like to learn about five of the best potential dividend stocks on the ASX this year, click here.

Härje Ronngard,

Junior Analyst, Money Morning


Harje Ronngard is the lead Editor at Money Morning. With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation. There are two questions Harje likes to ask of any investment. What is it worth? And how much does it cost? These two questions alone open up a world of investment opportunities which Harje shares with Money Morning readers 5 days a week.. Harje also contributes his insights in Total Income, headed by income specialist Matt Hibbard. Harje loves cash-rich businesses, so he feels right at home among Matt’s incredibly exciting income plays.

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