Coles Group (COL) AI Stock Analysis

Compare

285 Followers

Top Page

Coles Group

(Sydney:COL)

Select Model

Neutral 62 (OpenAI - 5.2)

Rating:62Neutral

Price Target:

AU$22.00

▲(4.81% Upside)

Action:ReiteratedDate:02/28/26

The score is driven mainly by stable overall financial performance with improving cash flow and a supportive earnings call focused on cost savings and e-commerce growth. These positives are partly offset by a weak technical setup (trading below key moving averages with soft momentum) and a less compelling valuation due to a relatively high P/E despite a moderate dividend yield.

Positive Factors

Cost-savings (SSI)

The Simplify & Save to Invest (SSI) program has delivered substantial, recurring cost savings that materially improve operating leverage. Sustained savings (> $1bn target) support margin durability, free cash flow generation and fund reinvestment in automation and customer offers, strengthening long-term competitiveness.

E‑commerce growth

Rapid online penetration and strong app engagement signal a durable structural shift in customer behaviour. Higher digital sales diversify revenue channels, enable data-driven personalization, and improve unit economics via subscriptions and click & collect, supporting sustainable sales growth and customer lifetime value over coming years.

Liquidity & cash generation

Robust operating cash flow and substantial undrawn facilities provide durable funding headroom and reduce refinancing risk. Strong cash generation supports capital investment (automation, store renewals) and dividend policy while allowing management to execute strategic initiatives without immediate reliance on external markets.

Negative Factors

High leverage

Elevated leverage increases sensitivity to adverse sales or margin shocks and limits financial flexibility. High debt levels can raise interest burden and constrain discretionary capital allocation, forcing tougher tradeoffs between dividends, store investment and deleveraging if macro conditions or retail margins deteriorate.

Liquor segment weakness

Sustained softness in liquor, especially at big‑box warehouse formats, signals a structural competitive challenge. Conversion costs and the need for further warehouse optimisation imply additional investment and execution risk, which can restrain segment profitability and reduce overall group growth contribution.

Inconsistent revenue & cost pressure

Volatile top-line growth, coupled with inflationary input costs (notably red meat and dairy) and elevated CODB expansion, compresses margin sustainability. If revenue momentum falters, operating leverage reverses and management may need to cut investments or raise prices, both of which risk longer-term customer retention and margin recovery.

Coles Group (COL) vs. iShares MSCI Australia ETF (EWA)

Market Cap

AU$27.59B

Dividend Yield3.24%

Average Volume (3M)2.38M

Price to Earnings (P/E)25.5

Beta (1Y)0.21

Revenue Growth1.84%

EPS Growth-3.62%

CountryAU

Employees115,000

SectorConsumer Defensive

Sector Strength42

IndustryGrocery Stores

Share Statistics

EPS (TTM)0.38

Shares Outstanding1,342,138,500

10 Day Avg. Volume2,316,402

30 Day Avg. Volume2,384,302

Financial Highlights & Ratios

PEG Ratio-7.23

Price to Book (P/B)7.32

Price to Sales (P/S)0.63

P/FCF Ratio19.21

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

AU$23.75

Price Target Upside13.15% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

EPS Forecast (FY)0.96

Revenue Forecast (FY)AU$45.90B

Coles Group Business Overview & Revenue Model

Company DescriptionColes Group Limited operates as a retailer in Australia. It operates through Supermarkets, Liquor, and Express segments. The company operates 835 supermarkets; and coles.com.au, which offers a choice of home delivery, including same-day, overnight drop and go services, and pick up from click and collect locations. Its Coles Financial Services provides insurance, credit cards, and personal loans to Australian families. The company is also involved in the retailing of liquor through its 933 stores under the Liquorland, First Choice, First Choice Liquor, and Vintage Cellars brand names. In addition, it operates 711 fuel and convenience stores; and operates as flybuys loyalty program. The company was formerly known as Coles Myer Ltd. and changed its name to Coles Group Limited. Coles Group Limited was founded in 1914 and is based in Hawthorn East, Australia.

How the Company Makes MoneyColes Group generates revenue primarily through the sale of groceries and everyday products at its supermarkets. The company's revenue model is built on high-volume sales, driven by its large customer base and extensive distribution network. Key revenue streams include in-store sales, online grocery purchases, and fuel sales from its Coles Express convenience stores. Additionally, Coles benefits from private label products, which typically yield higher margins compared to branded goods. Partnerships with suppliers and manufacturers also play a crucial role in optimizing procurement and pricing strategies, further enhancing profitability. Seasonal promotions, loyalty programs, and a focus on customer experience contribute to retaining and expanding their customer base, driving consistent revenue growth.

Coles Group Earnings Call Summary

Earnings Call Date:Feb 26, 2026

(Q2-2026)

% Change Since: |

Next Earnings Date:Aug 24, 2026

Earnings Call Sentiment Positive

The call presents a broadly positive operating and financial picture: strong group revenue and margin expansion, notable e‑commerce acceleration, meaningful cost savings from the SSI program, improved customer satisfaction and retention, and continued investment in automation and sustainability. Key challenges include a weak liquor segment (notably large warehouse formats), tobacco volume decline, near‑term cash timing noise, CODB growth from channel investment, and inflationary pressures in red meat and some dairy categories. Management communicated confidence the timing impacts will normalize in H2 and emphasized plans to optimize liquor warehouses and continue reinvesting efficiencies into customer value.

Q2-2026 Updates

Positive Updates

Strong Group Financial Performance

Group sales revenue of $23.6 billion, up 2.5%; group EBITDA $2.2 billion, up 7.8%; group EBIT $1.2 billion, up 10.2% (excluding significant items); NPAT up 12.5% (excluding significant items). Board declared fully franked interim dividend of $0.41 per share, up 10.8%.

Supermarkets Growth and Margin Expansion

Supermarkets sales +3.6% (adjusted +6.1% excluding competitive industrial action and tobacco). Supermarkets EBIT increased 14.6%; EBIT margin expanded by 55 basis points to 5.8%. Gross profit margin improved by 65 basis points, driven by ADC benefits, strategic sourcing, SSI and mix.

E‑commerce Acceleration

Supermarkets e‑commerce revenue grew 27%; online penetration now over 13%. App monthly active visitors grew 32%; app accounts for 54% of e‑commerce revenue. Same‑day rolled out in Melbourne and Sydney; Click & Collect Rapid expanded to 255 stores; Uber Eats partnership now offers up to 17,000 products. Online NPS saw a meaningful uplift.

Substantial Cost Savings & Automation Progress

Simplify & Save to Invest (SSI) delivered $133 million of cost savings in the half (≈$700 million since FY24) and remains on track to exceed $1 billion over the 4‑year program. Automation investments (CFC robotics, auto frame loading) and AI are delivering tangible efficiency and availability improvements.

Customer Satisfaction and Operational Improvements

Customer satisfaction scores improved across quality, availability, store look & feel, and price. Operationally delivered highest monthly DIFOT since December 2020, reflecting improved availability and execution.

Loyalty & Subscription Momentum

Flybuys exceeded 10 million active members, up 6.2%. Coles Plus subscriptions recorded double‑digit growth, supporting engagement and value propositions (free delivery, rapid Click & Collect, double points).

Sustainability and Community Outcomes

87.7% of eligible packaging recyclable or reusable; maintained 100% renewable electricity across operations; diverted more than 85% of solid waste from landfill. Fundraising: raised >$1.6m and $1.8m in two appeals, supporting more than 9 million meals.

Strong Balance Sheet and Cashflow Outlook (Timing Adjusted)

Operating cash flow (ex interest & tax) of $1.5 billion. Reported cash realization ratio 69% was affected by an additional ~$560 million payment run timing impact (adjusted ratio 94%); company expects full‑year cash realization ~100% after reversal. Weighted average drawn debt maturity 4.4 years; undrawn facilities $1.9 billion.

Network Investment and Store Program Progress

Gross operating capex $476 million (down $66m vs PCP); guidance for FY remains ~ $1.2 billion. Completed 160 store renewals (35 supermarkets, 127 liquor including 122 Simply Liquorland conversions) and opened 6 new supermarkets and 11 liquor stores. Victorian ADC remains on time and on budget.

Negative Updates

Liquor Segment Softness and Competitive Intensity

Liquor sales revenue declined 3.2% in the half. Liquor EBIT was impacted by softer top line and $13 million of one‑off costs related to Simply Liquorland conversions. Competitive intensity, particularly at the big‑box end, disproportionately impacted Liquorland warehouse stores (≈10% of network). Like‑for‑like liquor sales were down ~2.5% at the start of the new quarter.

Tobacco Sales Decline Dragging Top Line (but helping GP mix)

Lower tobacco sales reduced topline volumes but contributed ~37 basis points of gross profit margin benefit via mix. Illegal tobacco crackdown produced only marginal, short‑lived improvements in sales in some regions.

Short‑term Operating Cash Timing Headwind

An additional payment run around period end (~$560 million) created an extra cash outflow, compressing reported cash realization to 69% for the half (adjusted to 94% excluding timing). Working capital and net debt metrics were affected but expected to normalize in H2.

Cost Base and CODB Growth Pressures

Analyst commentary noted elevated cash CODB growth (around 6.6% ex implementation items). SSI benefits in the half were skewed toward CODB (≈75%) rather than GP, and investments in e‑commerce/CFCs and omnichannel offers have embedded costs even as they scale toward profitability.

Inflationary Pressure in Key Categories

Price pressure in red meat (beef, lamb) and some dairy categories (chilled desserts, milk) increased input costs; management absorbed part of these costs to support customer value, squeezing margin dynamics in the short term.

Liquor Warehouse Optimization Required Post‑Conversion

Following the Simply Liquorland conversion program, management highlighted work required to optimize Liquorland warehouse operations, and one‑off conversion costs ($13m) weighed on earnings in the half.

Company Guidance

Coles reiterated a fiscally disciplined outlook, keeping full‑year operating capital expenditure at about A$1.2bn (H1 accrued CapEx A$476m), expecting full‑year cash realization of 100% (H1 cash realization 69% or 94% adjusted for an extra ~A$560m payment run), and confirming SSI savings of A$133m in H1 (≈A$700m since FY24) with the program on track to deliver >A$1bn over four years; trading to date showed supermarket revenue up 3.7% in the first seven weeks of Q3 (5.3% ex‑tobacco), e‑commerce penetration is now >13% with e‑commerce sales +27% in H1, the app’s monthly active visitors +32% and the app now drives 54% of e‑commerce revenue, depreciation is expected to rise roughly A$100m for the year, funding headroom includes A$1.9bn undrawn facilities and a 4.4‑year weighted average drawn debt maturity, and the Board declared a fully franked interim dividend of A$0.41 per share (+10.8%) with ~A$600m of franking credits remaining.

Coles Group Financial Statement Overview

Summary

Financial statements point to stable operating margins and improving cash generation (better free cash flow growth and healthy operating cash flow vs. net income), but inconsistent revenue growth and high leverage (elevated debt-to-equity) temper the overall picture.

Income Statement

Positive

Coles Group's income statement shows a stable gross profit margin and a slight decline in net profit margin over the years. The revenue growth rate has been inconsistent, with a recent decline, indicating potential challenges in maintaining sales momentum. However, the EBIT and EBITDA margins remain relatively stable, suggesting operational efficiency.

Balance Sheet

Neutral

The balance sheet reveals a high debt-to-equity ratio, indicating significant leverage, which could pose risks in a volatile market. However, the return on equity remains strong, reflecting effective use of equity to generate profits. The equity ratio is moderate, suggesting a balanced asset structure.

Cash Flow

Positive

The cash flow statement highlights a significant improvement in free cash flow growth, indicating better cash management. The operating cash flow to net income ratio is healthy, suggesting good cash generation relative to net income. However, the free cash flow to net income ratio has fluctuated, indicating variability in cash flow relative to earnings.

Breakdown	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	44.35B	43.68B	40.59B	38.34B	38.95B
Gross Profit	11.70B	11.38B	9.10B	8.56B	8.67B
EBITDA	3.22B	3.21B	3.40B	3.27B	3.44B
Net Income	1.08B	1.12B	1.10B	1.05B	1.00B
Balance Sheet
Total Assets	20.29B	19.87B	20.49B	21.17B	20.48B
Cash, Cash Equivalents and Short-Term Investments	705.00M	675.00M	597.00M	589.00M	787.00M
Total Debt	10.33B	10.07B	8.97B	9.78B	9.90B
Total Liabilities	16.49B	16.25B	17.13B	18.05B	17.67B
Stockholders Equity	3.81B	3.62B	3.36B	3.12B	2.81B
Cash Flow
Free Cash Flow	1.45B	1.12B	1.29B	1.42B	1.56B
Operating Cash Flow	2.94B	2.79B	2.81B	2.69B	2.84B
Investing Cash Flow	-1.36B	-1.51B	-1.00B	-1.14B	-1.11B
Financing Cash Flow	-1.54B	-1.20B	-1.80B	-1.75B	-1.94B

Coles Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price20.99

Price Trends

50DMA

21.44

Negative

100DMA

21.97

Negative

200DMA

21.80

Negative

Market Momentum

MACD

0.03

Positive

RSI

34.62

Neutral

STOCH

52.49

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:COL, the sentiment is Negative. The current price of 20.99 is below the 20-day moving average (MA) of 21.76, below the 50-day MA of 21.44, and below the 200-day MA of 21.80, indicating a bearish trend. The MACD of 0.03 indicates Positive momentum. The RSI at 34.62 is Neutral, neither overbought nor oversold. The STOCH value of 52.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:COL.

Coles Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TWE	70 Outperform	AU$3.67B	-8.48	9.13%	7.42%	6.47%	281.30%
MTS	65 Neutral	AU$3.63B	12.78	17.17%	5.47%	4.74%	6.60%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
COL	62 Neutral	AU$27.59B	25.46	28.51%	3.24%	1.84%	-3.62%
ING	60 Neutral	AU$764.62M	13.57	36.84%	7.63%	-3.36%	-11.53%
WOW	55 Neutral	AU$43.79B	73.50	18.56%	2.86%	1.70%	796.48%
BGA	51 Neutral	AU$1.92B	235.21	-0.68%	1.95%	0.49%	-127.84%

* Consumer Defensive Sector Average

Performance Comparison

AU:COL

Coles Group

20.56

1.21

6.28%

AU:WOW

Woolworths Group Ltd

36.00

6.85

23.48%

AU:MTS

Metcash Limited

3.30

0.31

10.44%

AU:TWE

Treasury Wine Estates Limited

4.54

-5.91

-56.56%

AU:ING

Inghams Group Ltd.

2.06

-1.10

-34.79%

AU:BGA

Bega Cheese Limited

6.28

1.15

22.51%

Coles Group Corporate Events

Coles lifts underlying earnings on strong supermarket and online growth

Feb 26, 2026

Coles Group reported half-year group sales revenue of $23.6 billion, up 2.5%, and group EBIT excluding significant items of $1.23 billion, an increase of 10.2%, while underlying NPAT rose 12.5% to $676 million and an interim fully franked dividend of 41 cents per share was declared. The result was driven by strong Supermarkets performance, with adjusted sales revenue growth ex-tobacco of 6.1%, 14.6% EBIT growth, a 27.0% rise in eCommerce sales, and tangible benefits from automation and operational efficiencies, alongside improved customer satisfaction across key metrics and the completion of Liquorland banner simplification conversions.

The strong uplift in underlying earnings and digital engagement underscores Coles’ ability to leverage value-focused execution and efficiency initiatives to strengthen its competitive position in food and liquor retailing. Continued investment in automation, online capability and store experience is enhancing operational resilience and customer loyalty, supporting sustainable growth despite one-off significant items related to prior legal proceedings.

The most recent analyst rating on (AU:COL) stock is a Buy with a A$25.00 price target. To see the full list of analyst forecasts on Coles Group stock, see the AU:COL Stock Forecast page.

Coles declares AUD 0.41 interim dividend for half year to January 2026

Feb 26, 2026

Coles Group Limited has declared an ordinary fully paid dividend of AUD 0.41 per share relating to the six‑month period ended 4 January 2026. The dividend will trade ex‑dividend on 10 March 2026, with a record date of 11 March 2026 and payment scheduled for 30 March 2026.

The announcement confirms this is a routine interim distribution that does not require additional regulatory or shareholder approvals, indicating continuity in Coles’ capital management and dividend policy. Eligible shareholders may also participate in the dividend reinvestment plan, with elections due by 12 March 2026, providing an option to reinvest distributions back into Coles shares.

The most recent analyst rating on (AU:COL) stock is a Buy with a A$25.00 price target. To see the full list of analyst forecasts on Coles Group stock, see the AU:COL Stock Forecast page.

Coles files half-year results and launches analyst briefing

Feb 26, 2026

Coles Group has lodged its Appendix 4D, Half Year Directors’ Report, Half Year Financial Report and the Independent Auditor’s review report for the 27 weeks ended 4 January 2026 with the Australian Securities Exchange. The release of these documents provides investors and analysts with detailed insight into Coles’ financial and operational performance for the half year, supported by an analyst briefing and webcast to further explain the results and outlook.

The company is also hosting an analyst briefing at 10.00am AEDT, which will be webcast via its website to enhance transparency and engagement with the investment community. This structured disclosure and communication approach underscores Coles’ compliance with regulatory requirements and its commitment to keeping shareholders and market participants informed about its recent trading period.

The most recent analyst rating on (AU:COL) stock is a Buy with a A$25.00 price target. To see the full list of analyst forecasts on Coles Group stock, see the AU:COL Stock Forecast page.

Coles Sets Date for 2026 Half-Year Results and Analyst Briefing

Jan 30, 2026

Coles Group has scheduled the release of its 2026 half-year financial results for Friday, 27 February 2026, signalling an upcoming update on the company’s trading performance and financial health. The company will host a webcast analyst briefing at 10:00am (AEDT) on the same day, underscoring its focus on maintaining transparent communication with investors and market stakeholders ahead of a key reporting milestone for the Australian retail sector.

The most recent analyst rating on (AU:COL) stock is a Hold with a A$23.00 price target. To see the full list of analyst forecasts on Coles Group stock, see the AU:COL Stock Forecast page.

Coles to Defend Class Action Over South Australian Employee Entitlements

Jan 29, 2026

Coles Group has acknowledged that a class action has been filed in the Federal Court of Australia against its subsidiary Coles Supermarkets Australia Pty Ltd by Shine Lawyers. The proceedings concern alleged entitlements owed to Coles supermarket team members in South Australia between 23 December 2019 and 31 December 2023 under now repealed provisions of the Holidays Act 1910 (SA). Coles has stated it will defend the action and does not consider the proceedings to be market sensitive, signalling that management does not currently expect a material impact on its financial position or operations.

The most recent analyst rating on (AU:COL) stock is a Hold with a A$23.00 price target. To see the full list of analyst forecasts on Coles Group stock, see the AU:COL Stock Forecast page.

Coles Group Issues New Performance Rights Under Employee Incentive Scheme

Dec 9, 2025

Coles Group Limited announced the issuance of 680,774 performance rights as part of an employee incentive scheme. These securities are not intended to be quoted on the ASX, reflecting the company’s ongoing efforts to incentivize and retain its workforce, which could impact its operational efficiency and market positioning.

The most recent analyst rating on (AU:COL) stock is a Hold with a A$23.50 price target. To see the full list of analyst forecasts on Coles Group stock, see the AU:COL Stock Forecast page.

Coles Group Announces Director’s Interest Change

Dec 9, 2025

Coles Group Limited announced a change in the director’s interest in securities, specifically involving Leah Weckert. The change was related to direct and indirect interests, with Citicorp Nominees Pty Ltd acting as custodian for CPU Share Plans Pty Ltd under the company’s Equity Incentive Plan. This update is part of the company’s compliance with ASX listing rules, reflecting transparency in its governance and operations.

The most recent analyst rating on (AU:COL) stock is a Hold with a A$23.50 price target. To see the full list of analyst forecasts on Coles Group stock, see the AU:COL Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 28, 2026