Coles (ASX:COL) and Downer EDI (ASX:DOW) Showing Positive Momentum

June 19, 2025 06:10 PM AEST | By Team Kalkine Media

Coles (ASX:COL) and Downer EDI (ASX:DOW) Showing Positive Momentum — Image source: Shutterstock

Coles (ASX:COL): A Century-Old Retail Backbone

Coles has been a staple of the Australian retail landscape since its founding in 1914 in Victoria. With a core focus on fresh food, groceries, liquor, fuel, and financial services, the company has evolved into a well-diversified supermarket chain. Spun off from Wesfarmers in 2018, Coles now operates independently with significant holdings in brands such as Liquorland, Coles Express, flybuys, and more.

As of mid-2025, the Coles share price has surged 16.9% since the beginning of the year. This growth reflects market confidence in its dependable business model and capacity to generate shareholder value. Coles holds approximately 28% of the national grocery market, underlining its competitive stature in the retail sector.

Financially, the company stands out with a robust return on equity (ROE) of 32.4% in FY24, well above the typical 10% benchmark for mature businesses. However, it operates with a high debt-to-equity ratio of 278.4%, indicating significant leverage. This makes it crucial for Coles to maintain strong earnings and consistent cash flows. Over the last five years, it has maintained an average dividend yield of 3.8%, appealing to income-focused investors.

Downer EDI (ASX:DOW): Engineering Urban Australia and Beyond

Downer EDI plays a vital role in shaping the infrastructure that underpins everyday life in Australia and New Zealand. From maintaining city transport systems such as Yarra Trams to constructing passenger trains, Downer’s influence is widespread yet often behind the scenes.

The company’s business is divided into three core segments: Transport, Utilities, and Facilities. Transport contributes to more than half of its revenue, with the remaining spread across infrastructure maintenance and public utility services.

As of June 2025, DOW’s share price is just 3.8% below its 52-week high. On the valuation front, the company maintains a relatively moderate debt-to-equity ratio of 81.1%, suggesting a healthier balance between debt and equity than Coles. However, its ROE for FY24 stands at 3.6%, pointing to more modest returns. Since 2019, Downer has delivered a dividend yield averaging 3.7%, aligning it with peers in the ASX200 stocks category.

Coles and Downer EDI, as key players within the ASX200, provide a glimpse into two stable yet distinct sectors — retail and infrastructure. Their recent performance and underlying financial metrics may position them well for continued visibility among market watchers focused on established Australian businesses.

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