Coles Group: Looking better value

About the author:

Author name:

By Alex Lu

Job title:

Analyst

Date posted:

27 October 2023, 8:00 AM

Sectors Covered:

Industrials

• Coles Group's (ASX:COL) 1Q24 sales update overall was slightly weaker than anticipated.
• Supermarkets like-for-like (LFL) sales growth was broadly in line with our expectations but Liquor was softer.
• Management said sales growth in both divisions in early 2Q24 was broadly in line with 1Q24.
• We make minimal changes to earnings forecasts.
• Our target price moves down marginally to (login to view).
• With a forecast 12-month TSR of 15%, we upgrade our rating to Add. COL is now trading on 20.1x FY24F PE and 4.4% yield. With management taking steps to reduce total loss and supply chain investments on track with expectations in August, we think the stock is looking more attractive following the recent pullback in the share price.

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