Woolworths Group Ltd (WOW) AI Stock Analysis

• Market Cap: AU$37.83B
• Dividend Yield: 2.51%
• Average Volume (3M): 1.87M
• Price to Earnings (P/E): 23.3
• Beta (1Y): 0.59
• Revenue Growth: 5.26%
• EPS Growth: N/A
• Country: AU
• Employees: 201,413
• Sector: Consumer Defensive
• Sector Strength: 55
• Industry: Grocery Stores
• EPS (TTM): 0.60
• Shares Outstanding: 1,221,595,300
• 10 Day Avg. Volume: 1,797,462
• 30 Day Avg. Volume: 1,865,773
• PEG Ratio: 6.31
• Price to Book (P/B): 7.51
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 21.18
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: AU$33.20
• Price Target Upside: 6.74% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12

• Rating: 60 Neutral
• Price Target: AU$32.00 ▲(2.89%Upside)

Woolworths Group Ltd faces profitability and leverage challenges, reflected in the financial performance and earnings call. Technical indicators signal bearish momentum, while valuation suggests potential overvaluation. Despite strong eCommerce growth, strategic improvements are needed to address headwinds.

Positive Factors

Dividends

The company declared A$0.57/sh normal dividend and a A$0.4/sh special dividend.

Earnings

Woolworths has seen strong recovery on a combination of subsiding regulatory concerns and improving execution.

Negative Factors

Financial Performance

A drag is expected in NZ Foods, Big W, and Interest Expense, affecting overall performance.

Woolworths Group Ltd Business Overview & Revenue Model

Company Description

Woolworths Group Limited operates retail stores. It operates through Australian Food, Australian B2B, New Zealand Food, BIG W, and Other segments. The Australian Food segment procures and resells food and related products, and provides services to customers in Australia. It operates 1,087 Woolworths supermarkets and Metro Food stores. The Australian B2B segment engages in procurement and distribution of food and related products for resale to other businesses, as well as provision of supply chain services to business customers in Australia. The New Zealand Food segment is involved in the procurement and resale of food and drinks, and provides services to retail customers in New Zealand. This segment operates 190 countdown supermarkets. The BIG W segment procures and resells discount general merchandise products to customers in Australia. This segment operates 176 BIG W stores. Woolworths Group Limited also engages in the wholesale operation. The company was formerly known as Woolworths Limited and changed its name to Woolworths Group Limited in December 2017. Woolworths Group Limited was incorporated in 1924 and is based in Bella Vista, Australia.

How the Company Makes Money

Woolworths Group Ltd generates revenue primarily through the sale of groceries, fresh produce, and general merchandise in its supermarkets and grocery stores across Australia and New Zealand. The company's key revenue streams include retail sales from its network of Woolworths and Countdown supermarkets, as well as from its discount department store chain, Big W. In the liquor segment, Woolworths earns income through its Dan Murphy's and BWS stores. Additionally, the company's hotels and gaming operations, managed under the ALH Group, contribute to its earnings via food, beverage, and gaming machine revenues. Woolworths also benefits from its customer loyalty program, Everyday Rewards, which drives repeat sales and customer engagement. Strategic partnerships with suppliers and an extensive supply chain network further enhance its profitability.

Woolworths Group Ltd Financial Statement Overview

Summary

Woolworths Group Ltd exhibits strong revenue growth and stable gross profit margins, yet faces profitability challenges with declining net, EBIT, and EBITDA margins. The balance sheet indicates high leverage, posing potential risks, though asset backing remains reasonable. Cash flow generation is robust, but the recent decrease in free cash flow suggests liquidity management concerns.

Income Statement

Woolworths Group Ltd has shown consistent revenue growth, with a revenue growth rate of 5.65% from 2023 to 2024. The gross profit margin is solid at 27.32%, indicating good control over cost of goods sold. However, the net profit margin has declined to 0.16% due to significant reductions in EBIT and EBITDA margins, which are 1.92% and 5.20%, respectively. These margins suggest profitability challenges, despite revenue growth.

Balance Sheet

The company's debt-to-equity ratio is relatively high at 3.09, highlighting significant leverage. However, the equity ratio of 15.93% shows a moderate level of equity financing. Return on equity has decreased to 2.00%, reflecting diminished net income against equity. Overall, the balance sheet presents leverage risks but maintains adequate asset backing.

Cash Flow

Free cash flow decreased by 20.51% from 2023 to 2024, indicating potential liquidity issues. The operating cash flow to net income ratio is strong at 40.36, showcasing robust cash generation relative to net earnings. However, the free cash flow to net income ratio is 16.76, which reflects a decline in free cash flow efficiency.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	69.22B	67.92B	64.29B	60.85B	55.73B	53.08B
Gross Profit	18.85B	18.55B	17.18B	18.04B	16.33B	15.33B
EBITDA	5.98B	3.53B	5.36B	5.05B	5.43B	4.48B
Net Income	1.63B	108.00M	1.62B	1.55B	2.07B	1.17B
Balance Sheet
Total Assets	34.09B	33.94B	37.18B	33.27B	39.24B	38.47B
Cash, Cash Equivalents and Short-Term Investments	1.29B	1.30B	1.14B	1.03B	1.01B	2.07B
Total Debt	17.62B	16.72B	15.73B	16.76B	14.89B	18.66B
Total Liabilities	28.86B	28.37B	30.61B	27.17B	37.50B	29.44B
Stockholders Equity	5.13B	5.41B	6.42B	5.98B	1.38B	8.74B
Cash Flow
Free Cash Flow	1.25B	1.81B	2.28B	1.01B	2.25B	2.42B
Operating Cash Flow	3.70B	4.36B	4.80B	3.43B	4.64B	4.57B
Investing Cash Flow	-1.79B	-2.31B	-1.89B	-2.51B	-2.21B	-1.95B
Financing Cash Flow	-2.32B	-1.92B	-2.81B	-1.34B	-3.04B	-1.61B

Woolworths Group Ltd Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 31.10
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:WOW, the sentiment is Negative. The current price of 31.1 is below the 20-day moving average (MA) of 31.42, below the 50-day MA of 31.84, and above the 200-day MA of 30.70, indicating a neutral trend. The MACD of -0.20 indicates Positive momentum. The RSI at 43.08 is Neutral, neither overbought nor oversold. The STOCH value of 27.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:WOW.

Woolworths Group Ltd Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	HK$19.79B	11.88	0.81%	5.13%	2.72%	-47.45%
WOW	60 Neutral	AU$37.83B	23.31	32.27%	2.51%	5.26%	―
CLEGF		$18.11B	25.65	30.87%	2.15%	―	―
MCSHF		$2.91B	12.97	18.20%	4.96%	―	―

Woolworths Group Ltd Corporate Events

Woolworths Group to Close MyDeal and Focus on Marketplace Consolidation

Woolworths Group Ltd has announced the closure of its MyDeal customer website by 30 September, as part of a strategic move to consolidate its marketplace offerings into BIG W Market and Everyday Market. This decision aims to reduce operating losses and capitalize on the strong traffic growth of its existing digital platforms. The closure is expected to incur cash costs of $90 – $100 million and non-cash costs related to asset impairment, with further updates to be provided in August.

The most recent analyst rating on (AU:WOW) stock is a Hold with a A$33.00 price target. To see the full list of analyst forecasts on Woolworths Group Ltd stock, see the AU:WOW Stock Forecast page.

Woolworths Group Seeks Quotation for New Securities

Woolworths Group Limited has announced the application for the quotation of ordinary securities to satisfy future vesting of share rights under the NED Equity Plan. This move is part of their strategic financial operations, potentially impacting their market positioning and providing value to stakeholders.

The most recent analyst rating on (AU:WOW) stock is a Hold with a A$33.00 price target. To see the full list of analyst forecasts on Woolworths Group Ltd stock, see the AU:WOW Stock Forecast page.

Woolworths Group Issues Unquoted Equity Securities for Employee Incentive

Woolworths Group Limited announced the issuance of unquoted equity securities under an employee incentive scheme. This move involves the allocation of performance rights and share rights, which are subject to transfer restrictions until certain conditions are met. This initiative is likely aimed at aligning employee interests with company performance, potentially enhancing workforce motivation and retention.

The most recent analyst rating on (AU:WOW) stock is a Hold with a A$33.00 price target. To see the full list of analyst forecasts on Woolworths Group Ltd stock, see the AU:WOW Stock Forecast page.

Woolworths Group Announces Cessation of Securities Due to Unmet Conditions

Woolworths Group Limited announced the cessation of certain securities, specifically 264,413 performance rights and 38,446 share rights, due to unmet conditions. This announcement may impact the company’s capital structure and could have implications for stakeholders, reflecting potential challenges in meeting performance criteria.

The most recent analyst rating on (AU:WOW) stock is a Hold with a A$33.00 price target. To see the full list of analyst forecasts on Woolworths Group Ltd stock, see the AU:WOW Stock Forecast page.

Woolworths Group Director Increases Shareholding

Woolworths Group Limited has announced a change in the director’s interest, with Maxine Brenner acquiring an additional 470 ordinary shares through her superannuation fund, bringing her total to 8,935 shares. This acquisition reflects a strategic move within the company’s leadership, potentially impacting shareholder confidence and market perception.

The most recent analyst rating on (AU:WOW) stock is a Hold with a A$33.00 price target. To see the full list of analyst forecasts on Woolworths Group Ltd stock, see the AU:WOW Stock Forecast page.

Woolworths Director Increases Shareholding

Woolworths Group Limited announced a change in the director’s interest notice, revealing that Director Maxine Brenner has increased her indirect interest in the company’s ordinary shares. The transaction involved the acquisition of 625 shares, bringing her total to 8,465 shares, which were purchased on the market for $20,401.05. This change reflects a strategic move in the director’s investment portfolio, potentially indicating confidence in the company’s future performance.

Woolworths Group Reports 3.2% Sales Growth in Challenging Market

Woolworths Group Ltd reported a 3.2% increase in total third-quarter sales, reaching $17.3 billion, driven by growth in Australian and New Zealand food sales and a strong performance in eCommerce. Despite challenges such as weather disruptions and cost-of-living pressures, the company maintained stable customer satisfaction scores and continued to focus on retail fundamentals, including value and availability. The company faced additional costs due to weather events in Queensland and Northern NSW, impacting its BIG W segment, which struggled with clothing sales, leading to a projected loss before interest and tax for the second half of the year.

Woolworths Group Faces Shareholder Resolutions on Sustainable Seafood Sourcing

Woolworths Group Ltd has received resolutions from shareholders representing a small percentage of shares, to be considered at the upcoming Annual General Meeting in October 2025. The resolutions focus on the responsible sourcing of seafood, with requests for the company to report on the impact of its farmed seafood on endangered species and to align its seafood sourcing policy with global best practices. Woolworths is committed to transparency and will include relevant information in its Sustainability Report, reflecting ongoing due diligence and adherence to evolving standards.