Analyst Note| Johannes Faul, CFA |
Our earnings estimates for Coles Group are unchanged and we maintain our AUD 13.20 fair value estimate following its first-quarter trading update. The September quarter was predictably distorted by coronavirus lockdowns within New South Wales and Victoria, which disrupted operations and consumer shopping habits. While we view the Australian supermarket sector as broadly overvalued, on a relative valuation basis, we favour Coles over Woolworths. At our fair value estimates, shares in no-moat Coles and narrow-moat Woolworths screen some 30% and 60% overvalued, respectively.