ASX earnings: What can we expect from Coles shares next week?

Will Coles' next earnings be as dramatic as Woolies' were?

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We're still right in the middle of ASX earnings season this February. During this reporting period, we've already heard from the likes of Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS) and CSL Ltd (ASX: CSL). Coles Group Ltd (ASX: COL) shares are set to cross the proverbial earnings Rubicon next week on Tuesday, 27 February.

As one of the ASX's most widely-known companies, as well as a favourite for income investors, a lot of eyes will be watching Coles shares next Tuesday. So what should ASX investors expect?

Well, we can't know for sure until we hear from the company, of course. But we can point out a few things that could indicate what might be in store for shareholders.

What kind of earnings will Coles shares report next Tuesday?

Let's start by going through the numbers that Coles' arch-rival Woolworths Group Ltd (ASX: WOW) revealed this week.

Aside from the distraction of Woolworths' CEO Bradford Banducci unceremoniously stepping down at the same time Woolies' earnings were made public, it was a pretty mixed report for shareholders to go through.

For the six months to 31 December 2023, Woolworths reported a 4.4% rise in revenues up to $34.84 billion. That helped the company achieve a 2.5% increase in profits before significant items to $929 million. However, Woolworths also recorded a net loss after significant items (mostly the $1.5 billion writedown of Woolworths New Zealand) of $781 million.

Saying that, the company still rewarded shareholders with a 2.17% rise for Woolworths' next dividend. Investors are in line to receive the upcoming interim dividend of 47 cents per share, fully franked, on 11 April. That will be an increase of 1 cent per share from the company's 2023 interim dividend of 46 cents.

If Coles shares offer investors better numbers next week than what Woolworths gave to investors this week, there's arguably a good chance investors will take it as a win.

This is especially pertinent given Coles' quarterly sales update last October. As we covered at the time, Coles' numbers for the three months to 30 September 2023 indicated that Coles had lost market share to Woolworths. That was thanks to Woolies reporting a 6.4% sales growth figure for the quarter, which looked a lot better than Coles' equivalent 3.6% metric.

So it will be interesting to see if this pattern solidifies in Coles' upcoming numbers.

A "subdued year"?

But investors shouldn't get their hopes too high, at least according to one ASX broker. Just yesterday, my Fool colleague covered the views of ASX broker Citi on Coles shares. Citi does currently have a buy rating on Coles, with a 12-month share price target of $17.50.

However, the broker warned investors to expect "a subdued year" in FY2024, with earnings growth only projected to pick up in FY2025 and FY2026.

But we won't know for sure how Coles' first half went until we hear from the company on 27 February. See you then.

Motley Fool contributor Sebastian Bowen has positions in CSL and Telstra Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has positions in and has recommended Coles Group and Telstra Group. The Motley Fool Australia has recommended CSL. 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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