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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.

Do you own Coles shares? You can hedge your downside risk by trading CFDs now.

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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