Why did the Coles share price smash the ASX 200 in February?

A happy, smiling woman rides on the back of a trolley down the aisles of a supermarket.A happy, smiling woman rides on the back of a trolley down the aisles of a supermarket.

Well, the shortest month of the year has just wrapped up, and the changing of the guard, so to speak, gives us investors a good chance to reflect upon the month that was. So today, let’s examine the Coles Group Ltd (ASX: COL) share price. 

February ended up being a fairly rough month for ASX 200 shares and the S&P/ASX 200 Index (ASX: XJO). Between the end of January and yesterday’s market close, the ASX 200 lost 2.9% of its value, falling from 7,476.7 points down to 7,258.4 points. 

But let’s talk about the Coles share price. So it was an entirely different story when it came to Coles shares over February. The ASX 200 supermarket blue chip started last month at $17.76 a share.

But by the end of yesterday’s trading session, Coles was going for $18.18 a share. That means that the Coles share price rose by 2.36% over February. That’s more than a 5% beat of the broader market.

So what went so right for Coles shares last month?

Up, up: Why did the Coles share price dunk the ASX 200 in February?

Well, investors can thank the well-received earnings report that Coles delivered back on 21 February for one.

As we covered at the time, these earnings, covering the six months to 31 December 2022, contained almost no bad news for investors.

Total sales revenue from continuing operations was up 3.9% to $20.8 billion. Net profit after tax (NPAT) rose by 17.1% to $643 million, while basic earnings per share (EPS) lifted by a healthy 17.2% to 48.3 cents per share.

All of this allowed Coles to jack up its interim dividend again to 36 cents per share, fully franked. That’s a 9.1% rise over 2022’s interim dividend. Coles has continued its pattern of increasing both its interim dividend and final dividend in every earnings report since it first floated in 2018.

So it seems that these earnings contributed to the company’s impressive share price performance over February.

But Coles shares have been firing on all cylinders for most of the year. As of yesterday’s close, the company is up a pleasing 10.45% in 2022 thus far:

But it’s also possible investors just see Coles as a strong, sturdy investment in these times of high inflation, rising interest rates and an uncertain economic future.

Coles is viewed by many investors as a very defensive place to park cash. Its business of providing food, drinks, household goods and other life essentials is highly inelastic and it is well placed to weather most economic conditions, as the pandemic proved in 2020 and 2021.

Thus, we can’t discount this kind of goodwill from investors either.

So no doubt Coles investors would be chuffed with the month their company has just enjoyed. Let’s now see how the Coles share price fares in March.

The post Why did the Coles share price smash the ASX 200 in February? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. 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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