COL share price in focus
Coles is an Australian retailer offering a wide range of everyday products, including fresh food, groceries, general merchandise, liquor, fuel, and financial services. Founded in 1914 in Victoria, which remains its home base, Coles has been a prominent player in the Australian retail sector for over a century.
Previously owned by Wesfarmers from 2007 to 2018, Coles became a standalone entity when it was spun off and listed on the ASX under the ticker symbol ‘COL’. While the supermarket division is the primary source of earnings, Coles also owns or operates several related businesses, including flybuys, Liquorland, First Choice, Vintage Cellars, and Coles Express.
Although often seen as the ‘smaller sibling’ to Woolworths, Coles holds a significant share of the Australian grocery market, accounting for around 28%. Since becoming a separate listed company, Coles has earned a reputation as a reliable dividend payer.
DOW shares
Downer is the leading provider of integrated infrastructure services in Australia and New Zealand. They’re responsible for building, maintaining, and operating transit systems, utilities services, and public infrastructure.
While the name might not be familiar, you’ve definitely come across their work. Downer operate services like the Yarra Trams in Melbourne, and build the passenger trains you see in most states.
Downer separates its business into three main segments of Transport, Utilities, and Facilities. Transport delivers a little over 50% of their revenue, and Utilities and Facilities around 20% and 30% respectively.
COL & DOW share price valuation
We would consider COL to be a ‘mature’ or ‘blue-chip’ business, so some of the metrics that could be worth considering include the debt/equity ratio, average yield, and return on equity, or ROE. These measures give us a sense of the company’s debt levels, their ability to generate returns from their assets, and their ability to consistently return profits to shareholders.
For FY24, Coles Group Ltd reported a debt/equity ratio of 278.4%, meaning the company is leveraged (it has more debt than equity). This can increase risk so it’s important that a leveraged company is generating stable returns and has sufficient cash flow to pay interest on its debts.
Over the last 5 years, COL has delivered an average dividend yield of 3.8% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, COL reported an ROE of 32.4%. For a mature business you generally want to see an ROE of more than 10%, so COL clears this hurdle.
As for Downer EDI Ltd, they reported a debt/equity ratio of 81.1% in FY24, meaning the company has more equity than debt.
Since 2019 DOW has achieved an average dividend yield of 3.7% per year, and in FY24 reported an ROE of 3.6%
Keep in mind that these are only a small selection of metrics. We don’t have enough information to value the business or make an investment decision. To learn more about valuation, check out one of our free online investing courses.
