When considering an investment in Coles Group Ltd (ASX: COL) shares, investors likely believe that company profit is key to its dividend payout levels and share price gains.
But how much profit is the supermarket giant actually projected to make?
We're going to look at some projections for the ASX consumer staple share out to 2029.
Investors may have seen that the Coles share price has experienced volatility this year amid attention from the Australian Competition and Consumer Commission (ACCC) regarding discounting practices.
Time will tell how much of an impact this has on future profit. Coles may suffer a penalty if it loses the case in court, but it's also possible that the company could win.
Broker UBS has revealed how strong Coles' earnings are projected to be in the coming years.
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Kicking off with this year, FY25
Coles is almost halfway through its 2025 financial year, which is forecast to be close to its strongest financial performance ever.
UBS analysts recently attended Coles' investor day, noting that its strategy was progressing. Improvement is being driven by its involvement with Witron (automated distribution centres (ADC)) and Ocado (customer fulfilment centres).
The broker believes Witron ADCs are enablers of future improvement, and Ocado supports online sales growth.
According to UBS, Coles management's investments and choices throughout the business operations will help the operating profit (EBIT) margin climb from a forecast of 4.8% in FY25 to 5.2% in FY26.
The broker is currently forecasting that Coles' sales can slightly rise to $44 billion in FY25. However, net profit is expected to be flat at $1.12 billion.
How about FY26?
UBS predicts that Coles's financial year 2026 will be better. The broker expects the net loss contribution from Ocado to improve from the A$40 million projected in FY25, with this expected to improve as volumes increase. This can help the overall bottom line.
The broker notes that the business can continue growing by adding more retail floor space over the coming years. UBS said Coles was targeting more than 1.5% space growth, with roughly 14 new stores per year and 60 renewals per year. This could be a key driver for the Coles share price in the foreseeable future.
UBS projects that in FY26, Coles' revenue could grow by 1.8% to $44.8 billion, which could help increase net profit by 13.7%.
After that, FY27
The 2027 financial year could see Coles continue to deliver on its financial progress, which may help give the market the confidence to pay more for the supermarket business in the coming years.
In FY27, UBS is forecasting that Coles' revenue could increase by 3.2% to $46.2 billion, which could support net profit growth of 3.3% to $1.3 billion.
How might FY28 shape up?
Profit growth every year isn't guaranteed, but UBS expects it from the supermarket business.
If Coles can continue to deliver consistent growth, the market may be willing to pay a higher price/earnings (P/E) ratio on Coles shares for that consistency.
The broker is forecasting that, in FY28, Coles could deliver revenue growth of 3.1% to $47.68 billion, while net profit is projected to rise by 2.5%.
Finally, what's in store for FY29?
The 2029 financial year is the last year of the series of UBS projections. Life doesn't always go smoothly – it's quite possible that one or more of these years may see a financial decline for owners of Coles shares. However, a profit drop is not what UBS expects from Coles.
For FY29, UBS is projecting that Coles' revenue can rise by 3.1% to $49.2 billion, and net profit may increase by 3.6% to $1.39 billion. If Coles does achieve those numbers, it would mean the Coles share price is valued at 18x FY29's estimated earnings.
