Coles Group Ltd (ASX: COL) shares were in fine form on Tuesday.
Following the release of the supermarket giant's FY 2026 results, its shares were bid almost 5% higher, closing the session at $23.75.
This leaves Coles shares trading close to their record high of $24.59.
Can they keep climbing? Let's see what Bell Potter is saying about the company and its shares.
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What is the broker saying?
Bell Potter highlights that Coles delivered a profit slightly ahead of expectations in FY 2026. It said:
Revenue of $45,580m was up +2.8% YoY (vs. BPe $45,698m and VA $45,602m). EBITDA of $4,220m was up +7.1% YoY (vs. BPe of $4,220m and VA $4,244m). Underlying NPAT of $1,255m was up +13.7% YoY (vs. BPe of $1,195m and VA $1,241m).
The broker also highlights that Coles plans to make a significant investment in its store network, which will include the opening of 45+ new stores and the refurbishment of many more. It said:
COL has unveiled a material investment in its business, in: (1) Network investment of $300m over FY27-28e, covering new stores (+45 new Supermarkets) and refurbishments (1500 renewals); (2) $880m investment in VIC ADC ($190m spent to date and $300m in FY27e) with commissioning in FY30e; and (3) Strategic partnership with Accenture to generate >$100m in benefits by endFY29e (requiring an upfront $190m investment to be booked as an NRI).
Bell Potter has boosted its net profit estimates by 11% in FY 2027 and FY 2028, reflecting lower depreciation charges and the benefits of accelerated store opening program.
Should you buy Coles shares?
According to the note, Bell Potter has retained its hold rating on Coles shares with an improved price target of $24.40 (from $22.80).
This implies modest potential upside of 2.7% before dividends. Including them, Bell Potter expects a total return of just over 6%.
Commenting on its recommendation, the broker said:
The major acceleration in business investment creates a reasonably attractive growth profile through to FY29e, with a reasonable dividend yield. Staples remain in favour and COL is a beneficiary of this dynamic.
In determining our target price we have considered a sum of the parts and ROIC model. Major features of these approaches are: (1) Sum of the parts: We have incorporated multiple of 9.5x EBITDA for Supermarkets and 8.0x EBITDA for the liquor business, modest discounts to its peers; and (2) ROIC based approach : Which is predicated on a WACC of 8.1%, deriving an implied EV/EBITDA is ~9.3-9.5x FY27- 28e.
