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Is the Coles share price a buy with its deal with Accenture?

Is the Coles Group Limited (ASX: COL) share price a buy for its partnership with Accenture?

The Australian supermarket giant is going on a huge technology splurge over the past year and it has signed another agreement with technology business Accenture according to the Australian Financial Review.

Based on the reporting, Accenture will assist with digital and technology development initiatives for Coles. Accenture will be involved with the implementation of SAP systems for procurement, human resources and finance.

Usefully, Accenture has a global partnership with Microsoft and will be utilising this with the Coles agreement.

Steven Cain, CEO of Coles, said “The partnership with Accenture will enable us to deliver the efficiencies we need for long-term sustainability, and provide the agility to respond to rapidly-evolving consumer needs.”

“This is a vital part of Coles winning in its second century.”

Apparently Coles and Accenture have already been working together, but it will expand the relationship for a joint innovation fund and also help the supermarket business plan for the long-term with its technology.

It’s quite amazing how much Coles is investing in technology. Automation company Witron will help Coles with its planned automated distribution warehouses for the cost of $950 million and Coles has another $150 million deal with online food business Ocado.

Coles is certainly upping its game, so Woolworths Group Ltd (ASX: WOW) has some work to do if it’s going to keep growing over the long-term. But both of them have big international competition from Aldi, Amazon and Costco. 

Foolish takeaway

Coles is trading at 22x FY20’s estimated earnings with a projected grossed-up dividend yield of 5.4%. Coles may be able to provide more defensive earnings compared to many other ASX 20 businesses, but I don’t think it offers much growth so I’m not interested in buying shares.

I think these top blue chips would be more worthy of a place in my portfolio.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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