Aurizon combines a regulated A$6.8bn rail asset base and 6.2% yield with Bulk diversification, but flat FY2027 guidance and coal-transition risk temper the upside.
Overview
Aurizon is Australia’s largest rail freight operator, combining regulated below-rail infrastructure with commercial Coal, Bulk and Other/Freight services. Its CQCN network is a natural monopoly linking more than 40 mines to five ports, while above-rail contracts typically span five to 12 years and include indexation and fuel/access-cost pass-throughs. FY2026 demonstrated strong operating leverage: underlying revenue rose 6.1% to A$4,194m, underlying EBITDA increased 9.4% to A$1,724m, underlying NPAT climbed 24.4% to A$433m and EPS rose 29.2% to 25.2 cents. Free cash flow was A$573m and ROIC improved to 9.5%. **The central investment debate is whether Bulk and intermodal diversification can offset structural thermal-coal risk.** Bulk EBITDA increased 37.9% to A$233m, while intermodal EBITDA break-even is targeted for FY2027, but group FY2027 EBITDA guidance of A$1,725m–A$1,775m is broadly flat. At A$3.70, the stock trades at 14.2x earnings, 7.2x EV/EBITDA and 8.3x price/FCF, with an approximately 11.8% FCF yield and 6.2% dividend yield. The near-term catalyst set includes UT5+, Bulk contract wins, intermodal break-even and A$30m of Coal Transformation savings.