Bell Potter sees ‘attractive earnings growth’ for Coles
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The news: Bell Potter analysts expect supermarket giant Coles to provide an attractive earnings growth profile to FY27, with high levels of cash generation supporting growth in dividends.
The numbers: The brokerage initiated coverage on the stock with a ‘buy’ rating and a 12-month price target of $21.55.
Coles shares were up 0.4% at $19.26 in early trading on the ASX.
The context: The analysts see FY25 as a year of consolidation for the retailer, with attractive earnings growth on an underlying basis to follow. Bell Potter is forecasting more than 9.1% per annum compound growth in earnings to FY27, with this flowing through to growth in dividends as the capex peak has passed.
Their view is predicated on four core growth pillars — business improvement through the simplify and save program that is targeting $1 billion in gains by FY27; normalisation in loss rates; targeted returns on a $1.45 billion capital investment program; and the expansion of its store network at a pace consistent with population growth.
The source: Bell Potter research
