Coles Group Ltd (ASX: COL) shares could come under the microscope soon, with the S&P/ASX 200 Index (ASX: XJO) stock scheduled to release its results next week.
The business is expected to report on 27 August 2024, making it one of the last major ASX businesses to release its FY24 financials.
The focus has been on supermarket inflation in the last 12 months. But with inflation moderating, sales growth needs to be driven by food retailers delivering on their plans.
For Coles share investors hoping for some early insights into the company's financials, let's look at what some leading analysts are expecting from the company.
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Projections for FY24 result
Analysts at Goldman Sachs have estimates for Coles' upcoming report, and I'll run through some of them.
Food division sales are expected to increase 5.9% year over year to $38.9 billion, liquor division sales are expected to rise 1.6% to $3.67 billion, while total sales are forecast to increase by 7% to $43.3 billion.
In terms of expectations for the fourth quarter of FY24, Goldman Sachs is expecting comparable sales growth of 2.9% for Coles food and negative 2.6% for Coles' liquor. In the second half of FY24, Coles is expected to show 7.4% sales growth.
FY24 total gross profit is projected to increase by 6.8% to $11.27 billion, and total earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to grow 6.5% to $3.6 billion.
Looking at earnings before interest and tax (EBIT), Goldman Sachs projects food EBIT to rise 9% to $1.92 billion, and total EBIT is forecast to increase 6.8% to $1.99 billion. The EBIT margin is expected to be stable at 4.6%. In the second half of FY24, Coles' EBIT is expected to grow 15.2%.
The broker suggests statutory net profit after tax (NPAT) is forecast to slightly decrease by around 2% to $1.08 billion. Profit is normally the key statistic for investors looking at the Coles share price. Goldman Sachs is expecting earnings per share (EPS) of 80.6 cents, which could then fund an annual dividend per share of 64.5 cents.
At the current Coles share price, that would translate into a fully franked dividend yield and a grossed-up dividend yield of 5%.
Other comments
Goldman Sachs said the regulatory review headwind on supermarkets is "benign to date" with the latest Senate inquiry recommendations "largely expected by the market and the adoption of the mandatory code of conduct with suppliers to not materially impact current ways of working."
The broker also said that concerns about profit margins are "overdone", as its analysis and channel checks suggest supermarket topline growth of around 3%, with "ample levers" for gross profit margin expansion.
Coles share price snapshot
The chart below shows that the Coles share price has gone up 14% since the start of 2024.
