Col share price in focus
Coles is an Australian retailer that offers a wide range of everyday products, including fresh food, groceries, general merchandise, alcohol, fuel and financial services. Founded in 1914 in its birthplace of Victoria, Coles has been a prominent player in the Australian retail sector for more than a century.
Previously owned by Wesfarmers from 2007 to 2018, Coles became a stand-alone company when it was closed and the Asics listed on the ASX under the ticker symbol ‘Col’. Although the supermarket division is the main source of revenue, Coles also owns or operates a number of related businesses, including Flyboys, Liquorland, First Choice, Vintage Cellar and Coles Express.
Although often seen as the ‘little sibling’ to Woolworths, Coles holds a significant share of the Australian grocery market, accounting for 28 per cent. Since becoming a separately listed company, Coles has gained a reputation as a reliable dividend payer.
Key measurements
For investors, Col Revenue, Gross Marginand profit Can provide valuable insight into company performance.
The kernel last reported annual revenue of 43,684m, with a Compound Annual Growth Rate (CAGR) 3.9% per year for the last 3 years. Although absolute numbers are useful to know, the important thing is that trend. We want to see consistent, upward momentum in revenue.
Gross margin measures profitability before overhead costs are taken into account – it reflects the strength of a company’s core business operations. Col’s most recently reported gross margin stood at 26.1%.
Finally, the number we are most interested in – profit. Last fiscal year, Coles Group Limited reported a profit of $1,118 million. Three years ago they made a profit of 1,005m, representing a CAGR of 3.6%.
Financial health of Col shares
Profit is important, but just as important Capital health We want to know about the company’s leverage, their ability to pay debts, and their ability to generate a return on assets. One measure we can look at is Net debt. It is simply the company’s cash holdings minus total debt.
Coles Group Limited’s net debt currently sits at 9,394m. High levels of debt can increase sensitivity to changes in interest rates and economic cycles.
Another figure we can look at is Debt/Equity Percentage. It tells us how much debt the company has compared to shareholders’ equity – also known as leverage. Kernel has more debt than equity, with a debt/equity ratio of 278.4%. This level of leverage isn’t necessary if the company has stable revenue and cash flow, but it carries more risk.
Finally, we can see Return on Equity (ROE). ROE tells us how efficiently a company is converting shareholders’ equity into profits – a high number indicates that the company is generating a lot of value for investors, while a low number raises concerns that capital is not necessarily being allocated efficiently. Karan generated an ROE of 32.4% in FY24.
What to make of kernel shares?
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COL has a solid ROE and profits are trending upwards, so it could be a company worth keeping an eye on in 2025. However, income growth has slowed down.
Please keep in mind that this should only be the beginning of your research. The quality of the company is one thing, but making sure that the price is reasonable. There are many ways you can try to value a company. If you want to learn more about the value of share prices, you can sign up for one of our many free online investing courses.
