ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Coles Group's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2025 was 7.07%.
As of today (2026-06-25), Coles Group's WACC % is 5.30%. Coles Group's ROIC % is 6.58% (calculated using TTM income statement data).
Coles Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Coles Group (FRA:2OF) ROIC % Explanation
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Coles Group's WACC % is 5.30%. Coles Group's ROIC % is 6.58% (calculated using TTM income statement data).
Coles Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Coles Group ROIC % Related Terms
Coles Group ROIC % Historical Data
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The historical data trend for Coles Group's ROIC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Grocery Stores subindustry, Coles Group's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Coles Group ROIC % vs Retail - Defensive Industry
For the Retail - Defensive industry and Consumer Defensive sector, Coles Group's ROIC % distribution charts can be found below:
* The bar in red indicates where Coles Group's ROIC % falls into.
Note:
The Operating Income data used here is two times the semi-annual (Dec. 2025) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Coles Group (FRA:2OF) has a ROIC % of 7.07% as of Dec. 2025. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Coles Group and its competitors.
Is Coles Group's ROIC % too high?
Coles Group's current ROIC % is 7.07%. The Retail - Defensive industry median ROIC % is 5.54. Coles Group's value of 7.07% is 27.6% above this industry median. Overall, Coles Group has a GF Score™ of 72/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Coles Group's ROIC % compare to KR and SFM?
Coles Group's ROIC % of 7.07% can be compared against companies in the Retail - Defensive industry. The industry median ROIC % is 5.54. Coles Group's value of 7.07% is 27.6% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Retail - Defensive company?
The median ROIC % among Retail - Defensive companies is 5.54, based on 309 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Coles Group's current ROIC % of 7.07% is 27.6% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Coles Group and its competitors. For the Retail - Defensive industry, the median ROIC % is 5.54 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Coles Group's current ROIC % is 7.07%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Coles Group stock overvalued right now?
Based on GuruFocus' analysis, Coles Group (FRA:2OF) is currently considered Modestly Overvalued. The stock's GF Value™ is €12.19, compared to a current price of €14.20 — trading 16.5% above its estimated fair value. The current ROIC % is 7.07% and 27.6% above the Retail - Defensive industry median of 5.54. Coles Group's overall GF Score™ is 72/100 with 8 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Coles Group (FRA:2OF), the current ROIC % is 7.07% as of Dec. 2025. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Coles Group (FRA:2OF) Overvalued in 2026?
Based on GuruFocus' analysis, Coles Group stock appears to be overvalued.
The current stock price of €14.20 is trading 16.5% above its estimated GF Value™ of €12.19.
GuruFocus considers Coles Group to be Modestly Overvalued.
Key valuation signals for FRA:2OF:
ROIC %: 7.07%
GF Value™: €12.19 vs. price of €14.20 (16.5% above fair value)
Industry Position: 27.6% above the Retail - Defensive median
No single metric tells the full story. See the FRA:2OF stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Coles is one of Australia's largest retailers, operating the second-largest supermarket chain behind market leader Woolworths, and the country's second-largest liquor chain. The group has an extensive store network of over 1,800 stores and roughly 80% of Australians live within a 10-minute drive from a Coles store. The retailer employs some 120,000 people, who process some 20 million individual customer transactions a week. This compares with Woolworths processing about 30 million customer transactions per week from Australia's population of 27 million.
72GF Score
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