Coles and Woolworths are the two largest supermarket retail stores within Australia. They both own stores throughout many towns and cities in Australia and are well known to the Australian people. Today we will take a look at both their fundamental financial information and compare the two.

Woolworths was founded in late 1924 and Coles was founded in early 1914. In July 1993 Woolworths first listed on the ASX at a price of $2.45 per share. November 2018 Coles was split from parent owner Wesfarmers and was listed on the ASX with ticker code COL at a price of $12.49 per share.

Key Financial Information

Market Cap

As of today (21st April 2020) the following Market Cap of the two companies are as follows;
– Coles = $21.61 Billion AUD.
– Woolworths = $46.89 Billion AUD.
As you can see, Woolworths is over twice the size of Coles, this is mainly due to Woolworths other holdings besides their supermarket stores. Woolworths owns, BIG W, Dan Murphy’s and BWS. While Coles relies mainly on supermarket sales with additional income coming from their liquor sales and express (convenience fuel stations).

Supermarket Sales Revenue and EBIT

All figures are as Reported – Woolworths and Coles.

According to the information provided by the two companies, Woolworths Supermarkets perform better overall when it comes to financial statistics. With a higher Revenue comes a higher EBIT (hopefully) and this can been seen in the table above. Woolworths also is able to realise a larger EBIT/Revenue margin, meaning they are able to turn sales into cash by a higher margin than Coles are able to in their supermarket stores. Coles, however, is able to boast a better customer satisfaction rate, considerably higher, albeit, at a cost.

Liquor Sales Revenue and EBIT

Again we are able to see that Woolworths Group’s liquor sales are higher when compared to Coles. This should be quite evident with Woolworth’s ownership of BWS and Dan Murphy’s. With a higher revenue, it can be said that Woolworth’s liquor sales EBIT/Revenue percentage is quite enviable. A much larger cash conversion rate for Woolworths when compared to Coles.

Valuation

As discussed earlier, Woolworths Market Cap is double that of Coles. Taking today’s share price and reported earnings per share we can estimate a forward P/E. Using the information provided by the companies, we can see that Coles is priced in at an approximate PE of 21.4 and Woolworths at 23.1 (which was similar to another post I have done). Both seem relatively expensive to me for defensive stocks, although, it does make sense that they would trade at a premium during uncertain times.

Charts

Coles

Woolworths

Conclusion

Both Coles and Woolworths are trading at PE ratios above the 20 level. Both seem to have significant support lines (in terms of pricing). Taking a look at Woolworths charts it looks to be bouncing off the support line occasionally and heading up. Coles charts signal a minor bullish signal trending up. Still too expensive for me.

Disclaimer

The information in this article is for general purposes only and should not be considered as advice to any persons. No monies should be invested based on what is contained in this article. I own neither Coles (ASX:COL) or Woolworths (ASX:WOW) directly, I do hold them via ETF’s and LIC’s.



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