tiprankstipranks
Trending News
More News >
Woolworths Group Ltd (AU:WOW)
ASX:WOW
Advertisement

Woolworths Group Ltd (WOW) AI Stock Analysis

Compare
389 Followers

Top Page

AU:WOW

Woolworths Group Ltd

(Sydney:WOW)

Rating:64Neutral
Price Target:
AU$34.00
▲(8.77%Upside)
The overall stock score of 63.8 reflects the significant challenges Woolworths faces in profitability and leverage, despite strong revenue growth and some positive developments in eCommerce and sustainability. The technical indicators suggest a neutral outlook, and while the valuation is moderate, it does not offer a compelling discount. Earnings call insights highlight ongoing strategic adjustments needed to address operational inefficiencies and market pressures.
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 (WOW) vs. iShares MSCI Australia ETF (EWA)

Woolworths Group Ltd Business Overview & Revenue Model

Company DescriptionWoolworths Group Ltd (WOW) is a leading Australian retail company, primarily operating in supermarkets and grocery stores. The company is headquartered in Bella Vista, New South Wales, and it manages a diverse portfolio of retail brands, including Woolworths Supermarkets, Countdown in New Zealand, and Big W. Woolworths Group also has a significant presence in the liquor retail sector through brands like Dan Murphy's and BWS. Additionally, the company is involved in the hotel and gaming sectors through its ownership of ALH Group.
How the Company Makes MoneyWoolworths 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 Earnings Call Summary

Earnings Call Date:Feb 25, 2025
(Q2-2025)
|
% Change Since: 0.36%|
Next Earnings Date:Aug 27, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a challenging period with significant headwinds from industrial action and cost pressures impacting financial performance, especially in the Australian Food segment. However, there are positive signs in eCommerce growth, digital engagement, and sustainability achievements. Despite these positive elements, the balance of highlights and lowlights indicates a need for strategic adjustments and operational improvements.
Q2-2025 Updates
Positive Updates
eCommerce Growth
eCommerce sales increased 20% for the half, with 88% of online orders fulfilled in less than 24 hours, driven by Same Day and On Demand services.
Digital and Loyalty Engagement
The Woolworths and Everyday Rewards apps saw a growth of 18% and 9% respectively in weekly active users, with the Everyday Rewards app maintaining its top ranking among retail loyalty apps.
New Zealand Food Performance
New Zealand Food sales increased 2.7% in New Zealand dollars, with a 15.2% increase in EBIT, showing positive momentum.
Cartology and Adjacency Businesses
Cartology, the retail media business, experienced a strong half with 15.3% revenue growth, contributing positively to earnings.
Sustainability Achievements
The group achieved a 12.5% reduction in Scope 1 and 2 emissions in H1, supported by a switch to renewable electricity.
Negative Updates
Australian Food EBIT Decline
Australian Food EBIT declined 12.8% due to industrial action, supply chain costs, and shifts in customer behavior towards lower-priced items.
Impact of Industrial Action
The industrial action resulted in a $240 million loss in sales and a $95 million impact on EBIT in the half.
BIG W Performance
BIG W's financial performance was below expectations with EBIT declining by 46% to $29 million due to lower average selling prices and higher levels of clearance activity.
Cost Pressures
Wage increases (4.25%) and other inflationary pressures led to higher costs, impacting the overall financial performance.
Customer Value Perception
Challenges in improving price perception and customer trust, highlighted by ongoing cross-shopping behaviors and competitive pressures.
Company Guidance
During the call, the Woolworths Group provided guidance outlining several key metrics and focus areas for the fiscal year 2025. The group reported a 3.7% increase in sales for the first half, with a decline in H1 EBIT by 14.2% to $1.45 billion, largely due to industrial action and supply chain costs. The impact of industrial action resulted in an estimated $240 million loss in sales and a $95 million impact on EBIT. Australian Food's EBIT declined by 12.8%, with a significant contribution from increased wage and supply chain costs. The company observed a shift in customer behavior towards value-seeking, impacting gross margins. eCommerce sales grew 20%, with 88% of orders fulfilled in under 24 hours. Woolworths is aiming for annualized gross savings of approximately $400 million by the end of calendar 2025 through a simplification initiative. The group plans to focus on optimizing promotions, improving price perception, and leveraging digital tools, with a commitment to enhancing customer experience and operational efficiency.

Woolworths Group Ltd Financial Statement Overview

Summary
Woolworths Group Ltd shows strong revenue growth and stable gross margins but faces profitability issues due to declining net, EBIT, and EBITDA margins. The high debt-to-equity ratio indicates leverage risks, and while cash flow generation is robust, the decline in free cash flow poses liquidity concerns.
Income Statement
75
Positive
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
70
Positive
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
60
Neutral
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue67.92B64.29B60.85B55.73B53.08B
Gross Profit18.55B17.18B18.04B16.33B15.33B
EBITDA3.53B5.36B5.05B5.43B4.48B
Net Income108.00M1.62B1.55B2.07B1.17B
Balance Sheet
Total Assets33.94B37.18B33.27B39.24B38.47B
Cash, Cash Equivalents and Short-Term Investments1.30B1.14B1.03B1.01B2.07B
Total Debt16.72B15.73B16.76B14.89B18.66B
Total Liabilities28.37B30.61B27.17B37.50B29.44B
Stockholders Equity5.41B6.42B5.98B1.38B8.74B
Cash Flow
Free Cash Flow1.81B2.28B1.01B2.25B2.42B
Operating Cash Flow4.36B4.80B3.43B4.64B4.57B
Investing Cash Flow-2.31B-1.89B-2.51B-2.21B-1.95B
Financing Cash Flow-1.92B-2.81B-1.34B-3.04B-1.61B

Woolworths Group Ltd Technical Analysis

Technical Analysis Sentiment
Positive
Last Price31.26
Price Trends
50DMA
31.50
Negative
100DMA
31.14
Positive
200DMA
30.58
Positive
Market Momentum
MACD
-0.07
Negative
RSI
50.23
Neutral
STOCH
82.93
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:WOW, the sentiment is Positive. The current price of 31.26 is above the 20-day moving average (MA) of 31.13, below the 50-day MA of 31.50, and above the 200-day MA of 30.58, indicating a neutral trend. The MACD of -0.07 indicates Negative momentum. The RSI at 50.23 is Neutral, neither overbought nor oversold. The STOCH value of 82.93 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:WOW.

Woolworths Group Ltd Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$27.56B24.8430.87%3.36%6.00%4.02%
64
Neutral
$4.27B15.0518.20%4.63%4.04%-14.50%
64
Neutral
$38.03B23.4332.27%2.53%5.26%
63
Neutral
$20.42B12.48-5.08%3.15%3.08%-15.32%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AU:WOW
Woolworths Group Ltd
31.26
-0.72
-2.27%
AU:COL
Coles Group
20.55
3.24
18.74%
AU:MTS
Metcash Limited
3.89
0.52
15.50%

Woolworths Group Ltd Corporate Events

Woolworths Group to Close MyDeal and Focus on Marketplace Consolidation
Jun 26, 2025

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
Jun 17, 2025

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
Jun 17, 2025

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
Jun 12, 2025

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
May 13, 2025

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
May 7, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 31, 2025