Both Woollies and Coles are embroiled in a lengthy and major price fixing investigation by the ACCC, and at this point, parties have agreed on key facts, the bulk of the legal dispute now centers on interpretation, implying this issue is now in the home stretch. Interestingly, the banks, ignoring COVID anomalies, formed decent lows after the 2017–2019 Banking Royal Commission, and the supermarkets could be the same, as they will eventually be able to focus on their knitting.
WOW has remained a major underperformer in recent years, especially compared to rival Coles. So far in 2025, WOW is down -4% while COL is up +18% but the gap has narrowed of late. Last month, WOW gave an ok 1Q trading update, which met analysts’ estimates, but gains in their share price illustrated that expectations are very low. It was encouraging to hear the head of the nation’s largest grocery chain said she was “cautiously optimistic” about the holiday period, with supermarket sales in the second quarter so far up +3.2%.
- With the market still backing COL over WOW, for good reason, we see ongoing reversion percolating beneath the surface.
WOW has bounced from recent lows, but it remains ~17% below its 5-year average valuation, affording investors with some reasonable value where many pockets of the ASX are still on the expensive side of the ledger.
- We think the risk/reward dial has turned for WOW, especially if defensive stocks could gain traction into 2026 as the interest rate tailwind dissipates.
MM are bullish on WOW around the $29 area
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