After an incredible 2024 and a decent 2025, Coles Group Ltd (ASX: COL) shares are having a bit of a rough 2026.
At the time of writing, this ASX 200 consumer staples stock is trading at $21.25 a share. That puts the company 0.42% below where it started the year, and down almost 8% from where Coles was at the end of April.
That's a far cry from the 17% or so gain Coles enjoyed over 2024, and the approximate 12% return the grocer delivered last year. At least so far.
So does this mean Coles is undervalued at the current price of $21.25? Or is the company just descending back to the mean it has spent the past two years drifting away from? Today, let's talk about whether I'd buy Coles shares at $21.25 each.
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Is Coles a buy at $21.25 a share?
Let's start with some numbers. At $21.25, Coles shares are trading on a price-to-earnings (P/E) ratio of 28.1. That means you are paying about $28.10 for every $1 of earnings Coles brought in over the past 12 months.
That appears quite expensive for an established, mature company like Coles, which sells consumer staples and is growing at a slow, steady pace. To illustrate, Coles is about as expensive as Google-owner Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), and Microsoft Corp (NASDAQ: MSFT), and more expensive than Meta Platforms Inc (NASDAQ: META).
All three of these American tech titans arguably have far more exciting growth runways ahead of them compared to Coles. That indicates Coles remains a pricey and unappealing investment at current levels.
But let's see what kind of numbers the company has been posting.
At the start of this month, Coles posted its latest quarterly trading update. This revealed that the company had enjoyed revenue growth of 3.1% to $10.7 billion over the three months to 39 March 2026. That's comparable to the 3.6% sales growth the company posted for its full 2025 financial year last August. That year saw Coles bring in a net profit after tax (NPAT) of $1.08 billion, up 2.4% from FY 2024.
These are all respectable numbers. However, they don't justify an earnings multiple of 28 in my view. That implies growth will pick up substantially from these single-digit figures Coles has been recording of late. I don't see a realistic path to that occurring.
As such, I don't see many reasons to buy Coles shares at $21.25 each. Sure, income investors might appreciate Coles' fully-franked dividend yield. But even that is sitting at an uninspiring 3.44% right now. All in all, I think there are better opportunities elsewhere for most ASX investors today.
