COL share price is in focus.
Coles is an Australian retailer offering a wide range of everyday products, including fresh food, groceries, general merchandise, alcohol, fuel, and financial services. Founded in 1914 in Victoria, which remains its home base, Coles has been a dominant player in the Australian retail sector for more than a century.
Previously owned by Wesfarmers from 2007 to 2018, Coles became a standalone entity when it was demerged and listed on the ASX under the ticker symbol ‘COL’. While the supermarket division is the main source of earnings, Coles also owns or operates a number of related businesses, including Flybuys, Liquorland, First Choice, Vintage Sellers, and Coles Express.
Although often seen as Woolworths’ ‘younger sibling’, Coles has a significant share of the Australian grocery market, at around 28 per cent. Since becoming a separately listed company, Coles has gained a reputation as a reliable dividend payer.
Shares of BXB
Brambles manages the world’s largest pool of reusable pallets, crates, and containers, providing a centralized service to most supply chains globally.
The company is best known for its core brand CHEP, which operates in the Asia Pacific, Americas, and Europe Middle East and Africa (EMEA) regions.
Brambles makes money through an employment model. For example, a manufacturer will make a product, then transport the product to a retailer on CHEP pallets. Those pallets are then transferred back to CHEP or to another manufacturer or retailer in the supply chain. At each step, Brambles collects a daily rental fee on its pallets and crates.
Determination of price of COL and BXB shares
We would consider COL to be a ‘mature’ or ‘blue chip’ business, so some metrics that might be worth considering include: debt/equity ratio, average yield, and return on equity.or ROE. These measures give us an idea of a company’s level of debt, its ability to generate a return on its assets, and its ability to consistently return dividends 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 is important that a leveraged company is generating stable profits and has enough cash flow to pay interest on its debts.
Over the past 5 years, COL has provided an average dividend yield of 3.8% per annum. This is important to note if you are looking for income from your investment.
Finally, in FY24, COL reported an ROE of 32.4%. For a mature business you typically want to see an ROE of over 10%, so COL overcomes that hurdle.
As for Brambles Ltd, they reported a debt/equity ratio of 81.8% in FY24, meaning the company has more equity than debt.
Since 2019, BXB has earned an average dividend yield of 2.7% per annum, and reported an ROE of 25.6% in FY24.
Keep in mind that this is only a small selection of metrics. We don’t have enough information to value businesses or make investment decisions. To learn more about valuation, check out one of our free online investing courses.
