Coles share price: first-half results preview

We examine some of the key things investors should know before Coles (ASX: COL) reports its first-half results to the market next week.

When will Coles report their H1 results?

Coles Group (ASX: COL) is expected to report its H1 results to the market next week, on 19 February.

Coles share price: fundamentals in focus

Potentially suggesting that the current ‘supermarket wars’ – waged between Coles and Woolworths is heating up – analysts have a relatively flat outlook for the stock’s top and bottom-line growth figures in FY20.

Specifically, analysts are currently expecting that Coles will report FY20 revenues of $36,039 million – against earnings (EBITDA) of $1,979 million.

This represents a slight slump from the year prior, where Coles reported full-year revenues of $38,464 million and earnings (EBITDA) of $2,143 million.

Importantly, with the upcoming release of the supermarket's first-half results, investors and analysts will be able to get a better sense of how the company is tracking against the above expectations.

A recent Market Update from the company filled out some of those details, with it being noted that 'the success of the [Coles] Christmas campaign exceeded expectations with Supermarkets delivering comparable sales growth of 3.6% in the second quarter and 2.0% for the first half.'

It was further noted that:

'Comparable sales growth in Liquor and Express [...] were 2.1% and 5.1% respective for the second quarter and 1.5% and 2.9% respectively for the first half.'

'Coles' provisional first half FY20 Group EBIT [...] is expected to be between $710 million and $730 million,' the company also said.

Interestingly, though the Coles (ASX: COL) share price has risen ~40% in the last year, the company trades at a valuation relatively in-line with historical market averages, at 15.9x FY19 earnings, according to the ASX.

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The analyst outlook

Valuations aside, the current analyst outlook may suggest that the stock has run somewhat ahead of its fair value.

According to Bloomberg Data, Coles (ASX: COL) currently has 2 buy recommendations, 6 hold recommendations and 7 sell recommendations, against an average 12-month price target of $15.74.

At Coles’ current $16.980 share price, the above price target, if accurate, implies downside potential of around 7%.

The stock trended down almost a full percentage point today, even as the broader market rose ~30 points.


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