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Coles Ltd (ASX:COL) has jumped over +3.25% in early arvo trades on Monday as the company sees inflows on the back of a Buy rating from Australian stockbroker Bell Potter after last week’s earnings miss and sell-off.
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Coles was punished last week as it missed revenue growth expectations which, as far as this finance journalist is concerned, were already pretty low to begin with.
Analysts were expecting revenue growth of something around the figure of ~3%, while Coles delivered only +2.5% revenue growth in its latest half. That the earnings report came out on the last day of earnings season is something investors can make of what they will.
Coles was pushed down -8% on Friday as that result didn’t particularly win huge favour – but as ever, only days later, analysts at BP have decided they liked the fact profits were ahead of expectations.
Bell Potter have ultimately whacked a price target of $22.35/sh on Coles; it closed at $20.56/sh on Friday of Week 9. Helping matters is that BP analysts also expect Coles to come out with a dividend yield of 3.6% – fully franked – which means expected upside based on the close price could hit 12%.
The move, in tandem with a jump in the Woolworths share price (which is definitely outperforming Coles by anybody’s yardstick) has helped push the consumer staples up to the leading sector of the day ex-energy.
While the world continues to digest the implications of the US-Iran war with a view towards oil prices, ongoing fears in the tech sector broadly have led some investors to look for defensive stocks outside of riskier assets. And, of course, dividends always help.
Still, all of that said, the XJO is only down around half a percent on Monday, which isn’t too bad, really. At the time of writing, gold is up +1% – having pared back an intraday +2% gain earlier on Monday, which suggests at least that the risk of an Iranian war had been priced in.
COL last traded at $21.24/sh.
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