Coles Group – Valuation Review

Coles Group has been a stand alone listed business since November 2018, after being spun-out of Wesfarmers.

The financial performance to date has been patchy at best and the recent Coles Strategy Day highlights were the confirmation of the dividend payout of 80-90% for FY19, (which translates to an estimated $0.55 per share or 4.1% yield) and the $1bn cost out program.

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We forecast flat earnings and revenue growth into FY20 and suggest investors sell a covered call option to enhance the income return.

 

 

 

 

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