Coles also reported in October and the company “missed” for a change with the stock enduring its sharpest drop since May, as Coles posted softer quarterly numbers headlined by weaker liquor sales, again, the Australian people evolving away from smoking and drinking. Sales momentum into the second quarter remained steady, but competitive intensity is rising as we head into the key Christmas trading period, with Woolworths mounting a comeback. Their earnings were sound, yet the narrative has flipped: the market is now questioning whether Woolworths can recapture market share and momentum through the holiday season, in other words, is this as good as it gets for COL against WOW?
Coles continues to execute well operationally, but valuation and positioning have become stretched, leaving little room for error against an improving rival, with Coles shares still trading at a slight premium to the 5-year average, even after correcting over 10% from its September high.
- We continue to see WOW and COL as quality defensive holdings, but in the near term, we have a preference for WOW at current prices.
MM prefers WOW v COL at current levels
Add To Hit List
