Operating Margin - Atlas Arteria Group (ASX:ALX)

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Price: 4.82 AUD 0.84%

Market Cap: 7B AUD

17%

Current

-8%

Average

18.8%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

17%

Operating Profit

26.2m

Revenue

153.8m

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
AU		Atlas Arteria Group ASX:ALX	7B AUD	17%
AU		Transurban Group ASX:TCL	45.5B AUD	25%
IT	A	Atlantia SpA F:AU9	18.7B EUR	9%
FR		Getlink SE PAR:GET	8.3B EUR	36%
CN		China Merchants Expressway Network Technology Holdings Co Ltd SZSE:001965	66.7B CNY	21%
CN		Jiangsu Expressway Co Ltd SSE:600377	60.8B CNY	26%
MX		Aleatica SAB de CV BMV:ALEATIC	142B MXN	85%
MX		Promotora y Operadora de Infraestructura SAB de CV BMV:PINFRA	113.6B MXN	117%
CN		Shandong Hi-speed Co Ltd SSE:600350	43.4B CNY	21%
CN	Z	Zhejiang Expressway Co Ltd HKEX:576	44.5B HKD	37%
BR		CCR SA BOVESPA:CCRO3	27.3B BRL	24%

Atlas Arteria Group
Glance View

Economic Moat

None

Market Cap

7B AUD

Industry

Transportation Infrastructure

Atlas Arteria Group, a prominent global player in the infrastructure sector, operates a portfolio of essential toll road assets spread across Europe and North America. The company’s origins trace back to the early 2000s, emerging from a strategic union of infrastructure-driven investments, with its roots deeply embedded in the ambitious development of toll road networks. Over the years, Atlas Arteria has meticulously crafted a robust business model that revolves around owning and operating high-quality toll roads, each offering a reliable stream of revenue based on long-term concessions. By capitalizing on the growing global demand for road transportation, particularly in traffic-congested regions, the company has secured its place as a critical facilitator of mobility and trade. The mechanics of Atlas Arteria's revenue generation are straightforward yet effective. The company derives its income primarily from toll collections, a stable revenue mechanism largely immune to economic downturns due to the essential nature of transportation infrastructure. With strategic stakes in key roadways such as the M6 Toll in the UK and the ADELAC in France, Atlas Arteria profits not just from everyday commuters but also long-haul freight traffic. The company emphasizes operational efficiency and technological integration, ensuring seamless toll collection and customer satisfaction, which contribute to sustained traffic volumes. Moreover, their asset management strategy involves continuous improvement and expansion of their toll road networks to meet evolving transport demands. This diligent approach underscores Atlas Arteria Group's success in providing critical infrastructure while generating dependable returns for its stakeholders.

View ALX Analysis

ALX Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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Atlas Arteria Group
ASX:ALX