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 new deal with Accenture.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

More on Defensive Shares

Men standing together and defending the goal post symbolising defensive shares.
Defensive Shares

4 defensive ASX shares to own in a greedy market: Macquarie

These experts reckon the ASX's record highs won't last...

Read more »

Two mature women learn karate for self defence.
Defensive Shares

2 defensive ASX income shares I think investors should consider buying for bumper returns!

These stocks could offer defence and good returns.

Read more »

Defensive Shares

The pros and cons of buying Telstra shares right now

Is this an opportunity calling?

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Defensive Shares

My 2 favourite ASX utility shares for January 2024

These stocks could provide a good mixture of defence and growth.

Read more »

safe dividend yield represented by a piggy bank wrapped in bubble wrap
Defensive Shares

Weathering market storms: Dividend stocks in Australia as a safe harbour

Defensive earnings could help provide stability.

Read more »

safe dividend yield represented by a piggy bank wrapped in bubble wrap
Defensive Shares

Here's my recommendation for safe ASX shares to buy in December 2023

I think these stocks could be two leading defensive picks.

Read more »

Men standing together and defending the goal post symbolising defensive shares.
Defensive Shares

5 top defensive ASX shares for turbulent times

These stocks could be long-term defensive winners.

Read more »

a child dressed in army fatigues lies on the ground in his backyard wearing leaves and branches on his head as camouflage and peering through a pair of binoculars in a soldier pose.
Defensive Shares

Searching for defensive ASX shares? Here's what I look out for

Not all defensive companies make for good investments.

Read more »