The Coles Group Ltd (ASX:COL) share price hasn’t had a great day, or a great week. It’s still 18% off of its all-time high too. Time to buy?
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The Coles Group Ltd (ASX: COL) share price is not having a great day today. Or a great week for that matter. At the time of writing, Coles shares seem set to end the trading day at (or near) $15.84 a share, down 0.19% for the day. That’s just a little bit worse than the broader S&P/ASX 200 Index (ASX: XJO), which is currently down 0.14%. Over the week so far, Coles is down 0.44%.
In fact, since reaching an all-time high of $19.26 in August last year, the Coles share price is down almost 18%. So is this a buying opportunity for Coles shares today?
What’s to like about the Coles shares?
Let’s just take a look at how the Coles share price is looking to start with. So at $15.84 a share, Coles has a market capitalisation of $21.14 billion, a price-to-earnings (P/E) ratio of 20.14 and a trailing dividend yield of 3.82%. With Coles’ full franking, that dividend yield grosses-up to 5.46%.
According to iShares, the companies that make up the ASX 200 Index have an average P/E ratio of 23.19 at the present time. That means that Coles is currently being valued at less than the current market average.
Coles certainly looks cheap compared to its arch-rival Woolworths Group Ltd (ASX: WOW) too. On the current Woolworths share price of $41.20, the company has a P/E ratio of 36.77 and a dividend yield of 2.45%. Although saying that, another Coles rival in IGA-owner Metcash Limited (ASX: MTS) presently has a P/E ratio of 16.22 and a dividend yield of 3.96%.
Down Down is back back
We got some news this morning that may be weighing on the Coles share price today. Coles has reportedly relaunched its famous ‘Down Down’ campaign, cutting the prices of more than 250 products. Whilst this might initially attract more customers, the double-D’s return may also flag the return of the ‘supermarket wars’, which plagued both Coles and Woolworths’ profits a few years back. As they say, no one wins in a race to the bottom. We’ll have to wait and see if this news proves to be a long-term development.
Is the Coles share price a buy today?
One broker isn’t too concerned about Coles though and still rates it as a buy. According to CommSec, investment bank broker Goldman Sachs has a price target of $20.70 for Coles shares with a ‘buy’ rating, citing “resilient supermarket sector profitability”. That implies an upside of more than 30% on the current share price. And that’s not including dividends either.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.