Coles Group Limited

COL Details
Update on DRP:Coles Group Limited (ASX: COL) is in the retailing of products such as fresh food, groceries, household goods, etc. The market capitalisation of the company stood at ~A$20.26 Bn as on 15^th October 2019. The company recently, through a release announced that it would be conducting its 2019 Annual General Meeting on 13^th November 2019. In another update, the company announced that it would be implementing a dividend reinvestment plan for its shareholders. It is expected that the DRP would operate for eligible shareholders for dividends paid subsequent to the dividend, which was paid on 26^th September 2019. The following picture provides an overview of results for the financial year 2019:

FY19 Results (Source: Company Reports)

What to Expect:With respect to Express, the company stated that the growth in fuel volumes has been encouraging after more competitive fuel pricing as well as the introduction of the Little Shop 2 campaign. However, it will take time to build volumes to target levels. COL anticipates earnings growth under the New Alliance Agreement to remain subdued in FY20.

Stock Recommendation:The company possesses a strong balance sheet with investment-grade credit metrics. The return on equity of COL stood at 32.6% in FY19 as compared to the industry median of 13.3%. This implies that the company is providing decent returns to its shareholders in comparison to the broader industry. Thus, considering the above-stated facts and current trading levels, we maintain our “Hold” rating on the stock at the current market price of A$15.260 per share, up 0.461% on 15^th October 2019.

 
COL Daily Technical Chart (Source: Thomson Reuters)

 

Woolworths Group Limited

WOW Details

Annual General Meeting to be held on 16 December 2019:Woolworths Group Limited (ASX: WOW) is in the business of food, general merchandise, and specialty retailing via chain store operations. The company has a market capitalisation of ~A$47.01 Bn as on 15^th October 2019. The company through a release dated 4^th October 2019 announced that it would be conducting its 2019 Annual General Meeting on 16^th December 2019. In another release, the company announced that Siobhan McKenna has made a change to the holdings in the company by acquiring 48 ordinary shares at the consideration of $37.0463 on 30^th September 2019. The following picture provides an idea of key financial highlights for 53 weeks ended 30 June 2019:


FY19 Key Highlights (Source: Company Reports)

Future Aspects:The company has been maintaining customer focus while progressing its agenda throughout Woolworths Group. It anticipates the uncertain consumer environment and input cost pressures to persist along with as an impact from new enterprise agreements in FY20. With respect to BIG W, the company’s focus for FY20 primarily revolves around simplifying its business in stores and support office by aligning tasks to customer needs.

light of above-stated facts and current trading levels, we maintain our “Hold” rating on the stock at the current market price of A$37.380 per share, up 0.295% on 15^th October 2019.

 
WOW Daily Technical Chart (Source: Thomson Reuters)
 

Metcash Limited

MTS Details

Update on MFuture Program: Metcash Limited (ASX: MTS) acts as a wholesaler to independent retailers in the food, grocery, liquor, hardware and automotive industries. The market capitalisation of the company stood at A$2.56 Bn as on 15^th October 2019. The company recently announced that Peter Alan Birtles has made a change to holdings in the company by acquiring 40,000 fully paid ordinary shares for the consideration of $2.9975 per share. The following picture provides an overview of financial results for the financial year 2019:


Financial Results (Source: Company Reports)

Future Prospects:The company’s key personnel stated that there is a clearly defined five-year strategy called MFuture. It was mentioned that MFuture program would continue to have a strong focus on costs. MTS stated that the Supermarkets would continue to invest in growth initiatives via MFuture program and anticipates related operating expenditure in FY20 to be in line with that incurred in FY19.

Stock Recommendation:The return on equity of the company stood at 15.0% in FY19 in comparison to the industry median of 13.3%, which reflects that MTS is providing a better return to its shareholders against the peer group. The current ratio stood at 1.15x in FY19 as compared to the industry median of 0.81x. This implies that MTS stands with a decent liquidity position to address its short-term obligations against the broader industry. Thus, considering the future strategies and current trading levels, we give a “Buy” recommendation on the stock at the current market price of A$2.840 per share, up 1.068% on 15^th October 2019.

 
 MTS Daily Technical Chart (Source: Thomson Reuters)

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