The S&P/ASX 200 Index (ASX: XJO) had a fairly decent month last month. Over April, the ASX 200 rose from 7,177.8 points to 7,309.9 points – a rise of 1.8%. But let’s talk about the Coles Group Ltd (ASX: COL) share price. 

Coles shares started last month at $18.02 a share. But by the close of trading on 28 April, the Coles share price was up to $18.20. That’s a gain of exactly 1%. Not a bad return, all things considered. But it still leaves Coles as a market loser over April:

So what happened with Coels shares last month that might explain why the ASX 200 came out on top?

Why did the Coles share price lose out to the ASX 200 in April?

Well, there were a few developments that are worth covering. Firstly, in early April, Coles announced that it would be acquiring two automated milk processing facilities, one in New South Wales, and one in Victoria. It announced the $105 million purchase from Saputo Dairy Australia on 3 April. Investors responded positively at the time.

Coles was also the beneficiary of some ASX broker love last month. On 19 April, we took a look at broker Morgans’ positive view on the Coles share price. The broker gave Coles an add rating, with a 12-month share price target of $19.60. It also predicted that the grocery giant will continue to lift its dividends well into FY2024.

But perhaps the biggest piece of news out of Coles in April was the third-quarter sales report that the company revealed on 28 April.

As we covered, this saw Coles announce that total group sales revenue for the period between 2 January and 26 March rose 6.5% over the previous year to $9.67 billion. Coles’ supermarket, liquor and eCommerce sales all grew over the period too, with an impressive 28.9% rise in online liquor sales.

All in all, it looks like it was all good news for Coles over April. So why were investors hesitant to push Coles shares to a market-beating position last month? Well, there’s no easy answer. But consider that the Coles share price remains up around 10% year to date in 2023 so far.

In stark contrast, the ASX 200 has only gained around 3.3% this year. Since Coles has tripled the gains of the broader market in 2023, investors might forgive the small market underperformance it recorded last month.

At the current Coles share price, this ASX 200 blue chip share has a market capitalisation of $24.18 billion, with a dividend yield of 3.65%.

 

The post Why did the Coles share price underperform the ASX 200 Index in April? 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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