Transurban Group Ltd (ASX: TCL) shares have fallen around 0.5% in Tuesday lunchtime trade to a 52-week low of just $13.21.
At one point this morning, the shares were trading as low as $13.18.
Today's decline means the shares have also now shed around 13% of their value since reaching a 16-year high of $15.61 in mid-June.
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What caused Transurban shares to fall to an annual low?
The toll road operator's share price decline accelerated after the company posted its FY26 results and distribution guidance in mid-August.
Transurban reported a 7.5% increase in its proportional operating EBITDA and a 6.7% increase in its proportional toll revenue growth. The company's EBITDA margin also increased to 75.7%, up from 74.9% in FY25.
Management declared a FY26 dividend of 69 cents per share, up 6.2% from FY25.
Management also gave guidance for a higher distribution of 72 cents per share in FY27, but warned that free cash coverage is expected to fall slightly below their targeted 95% to 105% range.
But investors seem concerned about Transurban's rising debt-servicing costs, prompting questions about whether it is trading at a stretched valuation.
News in late-August that Transurban has been selected to deliver Tennessee's I-24 Choice Lanes project, in partnership with Ferrovial and Tikehau Star Infra, hasn't helped boost confidence either.
The 26-mile project has an estimated construction value of US$9.2 billion and a total concession value of around US$24.8 billion.
Again, Transurban's August traffic growth report didn't bring more investors back into the stock. The company reported groupwide average daily traffic (ADT) growth of 3.4% in August year-on-year. It noted particularly strong results in North America and continued momentum in Sydney and Melbourne.
Can the share price rebound?
It looks like brokers are also reserved about the company's outlook.
TradingView data shows that the majority (11 out of 14) have a hold rating on Transurban shares. But after the latest share price decline, there could still be some upside ahead. The $13.87 average target price implies around a 5% upside ahead, at the time of writing.
Morgans confirmed its trim rating on Transurban shares after the company posted its FY26 results last month. The broker now has a $12.53 target price on the shares, implying some more downside ahead.
It noted that the company's free cash flow guidance suggests Transurban is a slower-growth stock than its trading yield implies.
"If TCL were repriced to APA Group's yield the share price would trade down towards our $12.53 target price," Morgans said.
