Initial Buy Recommendation: 25 March 2022

Current Status: HOLD

Notes:

  • 22 February 2023

    • First half 2023 results:

      • EPS: AU$0.67 (up from AU$0.55 in 1H 2022).

      • Revenue: AU$33.2b (up 4.0% from 1H 2022).

      • Net income: AU$845.0m (up 25% from 1H 2022).

      • Profit margin: 2.5% (up from 2.1% in 1H 2022).

      • Revenue is forecast to grow 3.8% p.a. on average during the next 3 years, compared to a 3.2% growth forecast for the Consumer Retailing industry in Australia.

      • Over the last 3 years on average, earnings per share has increased by 16% per year but the company’s share price has fallen by 3% per year, which means it is significantly lagging behind earnings.

  • 26 August 2022

    • Full year 2022 results:

      • EPS: AU$1.27 (up from AU$1.23 in FY 2021).

      • Revenue: AU$60.8b (up 9.2% from FY 2021).

      • Net income: AU$1.55b (flat on FY 2021).

      • Profit margin: 2.5% (down from 2.8% in FY 2021).

      • Over the next year, revenue is forecast to grow 3.4%, compared to a 5.0% growth forecast for the Consumer Retailing industry in Australia.

      • Over the last 3 years on average, earnings per share has increased by 6% per year but the company’s share price has fallen by 1% per year, which means it is significantly lagging earnings.

      • Ordinary Dividend Announced for the Six Months Ended June 26, 2022

        • AUD 0.53 per share for the six months ended June 26, 2022. Payable on September 27, 2022. Ex. Date is August 31, 2022. Record Date is September 1, 2022.

  • 22 August 2022

    • Status moved to HOLD as price as risen above our Buy Zone.

OVERVIEW:

  • Exchange: ASX

  • Ticker: WOW

  • Sector: Retail Trade, Food Retail

COMPANY DESCRIPTION:

Woolworths Group Limited is an Australian trans-Tasman retailer headquartered in Bella Vista, Sydney, with extensive operations throughout Australia and New Zealand. It is the largest company in Australia by revenue and the second-largest in New Zealand.

FINANCIAL OVERVIEW:

  • Market Cap - $45.65 billion

  • P/E Ratio - 5.85

  • Dividend Yield - 2.48%

  • Return-On-Equity (5 year avg %) - 3.16%

  • Interest Coverage - 8.56

  • Net Income Growth Rate (5 year avg %) - 51.11%

  • Earnings Per Share (5 year avg %) - 55.70%

  • Current Ratio - 0.68

  • Revenue Growth Rate (5 year avg %) - 0.95%

RECOMMENDATION:

  • Buy Range - $33.45 - $38.82

  • Profit Target - $48.80 (approx 38.60% ROI)

  • Stop Loss - $29.96

  • Risk:Reward - 1:4.0

CHART: