Coles Share Price Beating WOW Share Price in a Six-Month Window

At time of writing, the share price of Coles Group Ltd [ASX:COL] is up 1.12%, trading at $16.78.

On a day when the ASX 200 is up 1.02% to 5,877.3, we compare how the COL share price is going with the WOW share price in a six-month window.

As you can see below, in the last six months Coles shares are outstripping Woolworths shares by a little over 12%:

ASX COL - Coles Share Price Chart

Source: tradingview.com

The Woolies share price ran up the charts stronger than Coles before the March low.

Then both companies experienced a strong spike in share price as panic buying set in.

Now with the AFR reporting that panic buying is creeping back in, we look at reasons why the Coles share price is up while the WOW share price is down in the last two weeks.

Coles share price reflects hunt for yield and Woolworths’ recent increase in remediation bill

In May, we highlighted how the Woolworth’s share price went off the boil, as panic buying sales numbers dried up.

As competitors, Coles and Woolworths are both benefitting from a shift in how yield-hungry investors think.

Big Four bank stocks are eyed with increasing caution, while the supermarket giants pick up the slack.

What is most likely separating the two recently, is the fact that Woolies recently increased its estimate a second time for the remediation bill for a long-running underpayment of employee wages, despite some strong numbers released in their most recent trading update.

Will Coles catch up to Woolies?

The Coles market cap is still around half of Woolies market cap.

Coles operates more than 800 supermarkets, while Woolworths operates 995 supermarkets.

So a small margin on that front.

However, Woolies serves 29 million customers annually, while Coles serves 21 million customers.

Perhaps what’s more revealing is a comparison of earnings. You can see a comparison of the two companies’ financials below courtesy of Market Screener:

Coles’ Financials

ASX COL - Coles Company Financials

Source: Market Screener

 

Woolworths’ Financials

ASX WOW - Woolworths Company Financials

Source: Market Screener

 

As you can see, Woolworths has slightly less than double Coles’ sales, more net income but less debt.

Coles has a higher yield for both 2020 and 2021 and a lower P/E.

It’s a tough one to pick.

Going forward, I believe a lot depends on automation for these two companies.

Over the course of the next five–10 years this will help increase efficiency, and in many ways it’s a tech race for a captive audience.

We all buy groceries, it’s just who can get them to us the quickest and at the lowest prices.

Regards,

Lachlann Tierney
For The Rum Rebellion


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 


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