SGH -

 SGH - seven group 

kerry stokes' old family company

2026

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Over the last 5 years (FY21 to FY25), SGH Limited (ASX: SGH)—formerly Seven Group Holdings—has performed very strongly. Revenue more than doubled from $4.84 billion to $10.74 billion, underlying EBIT grew from $792 million to $1.54 billion, and the balance sheet improved alongside a stable Return on Equity (ROE) near 10%. [1, 2]

Profit and Revenue Growth

Revenue: Rose steadily from $4.84B in FY21 to $10.74B in FY25, driven by major contributions from WesTrac, Coates, and full consolidation/growth of Boral. [1]
Underlying EBIT: Increased from $792M (FY21) to $1.54B (FY25). [1]
Underlying Net Profit After Tax (NPAT): Grew to $924M in FY25 (up 9% on the prior year), reflecting strong pricing power and operational efficiencies across industrial services. [1, 2, 3]

Debt and Balance Sheet Health

https://stockanalysis.com/quote/asx/sgh/financials/ratios/

Debt/ Equity ratios:

2026 - 1.05

2025 -1.13

2024 - 1.46

2023 - 1.29

2022 - 1.56

2021 - 0.82

Net Debt: Stood around $4.0 billion as of recent reports.
Leverage (Net Debt to EBITDA): Improved down to roughly 1.91x–2.0x, which sits comfortably below the group's target threshold due to robust cash generation (operating cash flow hit $1.95B in FY25).
Debt Profile: Refinanced successfully with extended long-term maturities and no major corporate bank facility hurdles until FY30. [1, 2]

Return on Equity (ROE) and Efficiency

ROE: Historically tracks around 9.7% to 10.1%, demonstrating steady capital efficiency relative to large industrial conglomerates.
Shareholder Returns: SGH significantly outperformed the broader ASX100 index over the multi-year stretch, backed by consistent fully franked dividends (growing to 62 cents per share in FY25) and an announced capital-management on-market share buyback of up to $500 million. [1, 2, 3, 5]

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The trailing Price-to-Earnings (P/E) ratio for Seven Group Holdings (ASX: SGH) is 40.11, while its 10-year historical average median sits at 22.20. [1, 2, 3]

Because P/E ratios fluctuate significantly based on whether calculations utilize statutory earnings (which include major one-off line items and abnormals) or underlying earnings (normalized business performance), the historical trend line is best evaluated across both metrics. [1, 2]

Historical P/E Ratio Breakdown (10-Year Overview)

Fiscal Year Ending (June)	Statutory P/E Ratio (with Abnormals)	Underlying P/E Ratio (Normalized)	Market Context & Valuation Notes
2026 (Current Trailing)	40.11	17.93	Share price expansion driven by strong Boral consolidation and industrial division cash flows.
2025	37.9x	23.53x	Strong earnings growth offset by heavy non-cash abnormal items ($452.5M).
2024	31.4x	16.78x	Period of strong execution; 20% EBIT expansion multiple compressions.
2023	69.8x	13.67x	Peak statutory multiple due to temporary non-cash asset revaluations impacting reported net profits.
2022	7.1x	11.2x	5-year low multiple as industrial cycles bottomed out post-pandemic.
2021	13.8x	14.5x	Rebound year backed by infrastructure spending boom across WesTrac and Coates Hire.
2020	34.2x	13.1x	Statutory earnings suppressed by impairment provisions on media investments (Seven West Media).
2019	22.8x	13.6x	Strong underlying performance with revenues rising 27%.
2018	11.8x	15.0x	Mining investment recovery lifted WesTrac operations.
2017	45.1x	16.2x	Depressed statutory profit ($46.2M) skewed the statutory P/E ratio higher.

3 Crucial Insights for Evaluating SGH's P/E History

The "Abnormal" Skew: As a heavy conglomerate holding company (possessing WesTrac, Coates, Boral, Beach Energy, and Seven West Media), SGH's statutory P/E often suffers major distortion from non-cash impairments and step-acquisition accounting. Serious fundamental analysis should prioritize its underlying P/E (historical mean closer to 14x–17x). [1, 2]
Current Premium Valuation: At a current statutory multiple exceeding 40x, SGH is trading heavily on the expensive side compared to its standard 10-year patterns. This is largely because the market has fully priced in the consolidation efficiencies from buying out Boral. [1, 2, 3]
Sector Comparison: Its forward-looking P/E of roughly 17.93 signals that analysts expect normalized industrial earnings to catch up with the rising share price over the next 12 to 24 months. [1]

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ROIC vs WACC 2026

For SGH Limited (ASX:SGH), current snapshots show a Return on Invested Capital (ROIC) of approximately 6.87% to 5.10% against a Weighted Average Cost of Capital (WACC) of roughly 7.57%. Over the trailing 10-year cycle, SGH's blended ROIC has generally hovered near or slightly below its average cost of capital during transitional phases, though disciplined asset integration and its industrial services expansion have driven return on capital employed (ROCE) higher into the 10%–15% range. [1, 2, 3]

Understanding ROIC vs. WACC in SGH

Value Creation Spread: When ROIC exceeds WACC, a business creates net economic value. When ROIC tracks below WACC, returns fail to fully clear capital hurdles. [1, 2]
SGH Hurdle Rates: Management explicitly benchmarks operational deployment and M&A against internal WACC and ROIC thresholds, targeting a Return on Capital Employed (ROCE) of ~15% across its heavy industrial, energy, and building material portfolios. [1]
Decadal Trend: Over the past 10 years, SGH transformed from a localized investment house into a major diversified industrial conglomerate (incorporating heavy hitters like Boral), leading to fluctuating annual spreads as capital base expansions temporarily absorb operating cash flows before full compounding takes effect

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