Woolworths Group Ltd (WOW) AI Stock Analysis

Compare

477 Followers

Top Page

Woolworths Group Ltd

(Sydney:WOW)

Select Model

Neutral 55 (OpenAI - 5.2)

Rating:55Neutral

Price Target:

AU$37.00

▲(0.27% Upside)

Action:ReiteratedDate:02/26/26

The score is held back primarily by weak financial statement quality (low profitability, high leverage, and revenue decline) and a very high P/E valuation. These are partly offset by improved cash generation, positive earnings-call indicators (cost savings and stronger underlying EBIT/EPS trends), and supportive—though overextended—technical momentum.

Positive Factors

eCommerce scale & profitability

Rapid growth and a large jump in eComX profit show the online channel is shifting from investment to a durable profit contributor. Improved picking, last‑mile productivity and higher direct profitability reduce structural cost-to-serve and strengthen omnichannel competitive positioning.

Delivered structural cost savings

Achieving a $400m run‑rate savings demonstrates operational leverage and management execution. Sustained CODB reductions free up margin to fund lower customer prices and reinvestment, supporting medium‑term EBIT improvement and resilience against input cost swings.

Strong cash generation

Robust free cash flow growth and healthy operating cash conversion provide financial flexibility for capex, dividends and deleveraging. Reliable cash generation cushions the business through transitional costs and supports reinvestment in eCommerce and store networks.

Negative Factors

High financial leverage

Elevated leverage increases refinancing and liquidity risk, limiting strategic optionality. With meaningful capex and multi‑year transition costs ahead, high debt-to-equity constrains the company’s ability to absorb shocks or accelerate investments without further raising leverage or cutting returns.

Weak revenue and thin profitability

A sharp revenue decline and very slim net margin indicate structural pressure on core retail economics. Low profitability reduces internal funding capacity, makes margin recovery more sensitive to input cost swings, and limits room to invest in price, service or digital capabilities.

Multi-year transition costs and competitive pressure

Ongoing supply‑chain commissioning and dual‑running costs will persist for years, delaying expected efficiency gains. Combined with heightened eCommerce competition, these structural expenses compress near‑term margins and raise execution risk for the planned benefits through FY28–FY29.

Woolworths Group Ltd (WOW) vs. iShares MSCI Australia ETF (EWA)

Market Cap

$44.89B

Dividend Yield2.86%

Average Volume (3M)2.55M

Price to Earnings (P/E)75.3

Beta (1Y)0.56

Revenue Growth1.70%

EPS Growth796.48%

CountryAU

Employees201,413

SectorConsumer Defensive

Sector Strength42

IndustryGrocery Stores

Share Statistics

EPS (TTM)0.70

Shares Outstanding1,221,599,200

10 Day Avg. Volume2,602,115

30 Day Avg. Volume2,546,696

Financial Highlights & Ratios

PEG Ratio0.05

Price to Book (P/B)7.81

Price to Sales (P/S)0.55

P/FCF Ratio18.78

Enterprise Value/Market Cap1.61

Enterprise Value/Revenue1.03

Enterprise Value/Gross Profit4.34

Enterprise Value/Ebitda15.74

Forecast

1Y Price Target

$35.34

Price Target Upside-4.21% Downside

Rating ConsensusModerate Buy

Number of Analyst Covering10

EPS Forecast (FY)1.3

Revenue Forecast (FY)$71.54B

Woolworths Group Ltd Business Overview & Revenue Model

Company DescriptionWoolworths 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 MoneyWoolworths Group generates revenue primarily through the sale of groceries and fresh food products in its supermarkets. The company's revenue model is heavily based on retail sales, with significant income coming from the sale of private label products, which typically have higher margins than branded items. Additionally, Woolworths earns revenue from its online shopping services, where customers can order groceries for delivery or pick-up. The company also benefits from ancillary services, including loyalty programs like the Woolworths Rewards program, which drive customer engagement and repeat purchases. Strategic partnerships with suppliers and investment in technology to enhance supply chain efficiency further contribute to Woolworths' earnings. Seasonal promotions and exclusive product offerings also play a role in boosting sales during peak shopping periods.

Woolworths Group Ltd Earnings Call Summary

Earnings Call Date:Feb 24, 2026

(Q2-2026)

% Change Since: |

Next Earnings Date:Aug 26, 2026

Earnings Call Sentiment Positive

The call presented a predominantly positive operational and financial half when excluding one-off remediation charges: solid sales growth, strong EBIT and EPS progression before significant items, meaningful eCommerce and complementary business momentum, delivery of $400m cost savings, and a range of sustainability and AI adoption milestones. Key challenges were a large one-off remediation charge that sharply reduced reported NPAT, ongoing supply chain transition costs with multi‑year ramp-up, margin pressures in some categories and heightened competitive intensity in eCommerce. On balance the fundamental trading improvement, cost delivery and strategic progress outweigh the one‑off and transitional headwinds.

Q2-2026 Updates

Positive Updates

Group revenue growth

Group sales increased 3.4% to $37.1 billion for H1 FY26, with all trading segments reporting sales growth.

Strong EBIT and EPS (before significant items)

Group EBIT before significant items rose 14.4% to $1.7 billion and group NPAT before significant items increased 16.4% to $859 million; basic EPS before significant items was $0.704, up 16.4%.

eCommerce momentum and profitability

Group eCommerce sales grew 14.6%; WooliesX sales +14.2% and eCommerce profitability improved with a 93% increase in eComX directly attributable profit and strong operational productivity (picking and last-mile optimization).

Cost savings and CODB reductions

Delivered the $400 million run-rate cost savings target by December; CODB as a percentage of sales declined by 24 basis points in the half, helping to fund customer value initiatives.

Complementary businesses driving earnings

Complementary businesses and services contributed around one-third of the group's EBIT growth in H1. Petstock sales +13.1% and EBIT +49.6% (comparable sales +5.8%, eCom +24%). PFD and Rewards & Services also delivered double-digit underlying EBIT growth.

BIG W and New Zealand improvement

BIG W GTV (including BIG W Market) increased 5.8%, BIG W EBITDA +12% and EBIT up 122% (benefitting from better mix and stock management). New Zealand Food EBIT increased 22.4% with eCommerce +13.9% in NZD.

Cash flow, capex and capital management

Operating cash flow before interest and tax was $3.2 billion (+4.5%). Operating CapEx H1 of $913 million; full-year operating CapEx expected to be ~ $2.0 billion. Net debt/EBITDA ~2.7x, modestly lower than FY25.

Dividend and shareholder returns

Final dividend approved of $0.45 per share, an increase of 15.4% on the prior year; franking credits ~ $1.2 billion after interim payment.

Sustainability and AI adoption milestones

Achieved 100% renewable electricity across operations, delivered 100 million OzHarvest meals over 10 years, restored soft-plastic recycling to 600+ stores. AI adoption: customer chatbots automated >60% of contacts, Gemini used by ~2/3 of support office staff, Quick Assist used by >6,000 store team members weekly, and digital lists used by >1 million customers weekly.

Improved customer metrics and availability

Woolworths Food Retail VOC NPS improved by 10 points year-on-year; ‘value for money’ scores up 8 points YoY; out-of-stocks voice of customer improved by 10 points; increased stock weight on promotions improved availability.

Negative Updates

Remediation significant items hit earnings

The group recorded significant items before tax of $698 million (remediation of award-covered salary team members following a Federal Court decision). Including significant items, NPAT attributable to owners fell 49.4% to $374 million and EPS declined 49.4%.

Supply chain transition and commissioning costs

Supply chain transition and dual-running/commissioning costs weighed on comparability and normalized EBIT; management expects these costs to continue through FY26 and into ramp-up years with benefits maturing closer to FY28–FY29.

Margin pressures excluding Tobacco and category inflation

Gross margin excluding Tobacco declined by 14 basis points YoY due to growth in complementary businesses, investments in lower shelf prices and some supplier price dynamics (e.g., red meat pressure and weather-impacted produce like capsicum/strawberries).

Everyday Needs categories underperformance

Everyday Needs (e.g., parts of personal care, some baby and pet subcategories) were slower to respond historically and still require further range and pricing work despite early remediation actions and product relaunches.

Competitive intensity in eCommerce and on-demand

Noted heightened competition in food eCommerce and on-demand (Coles/Ocado, Amazon, Costco, DoorDash/third-party platforms), increasing customer acquisition intensity and market pressure on prices and service.

Other segment loss and lower property gains

The 'other' segment recorded a loss before interest and tax of $124 million, up 16.3%, driven by lower property disposal gains and a rebuild of the short-term incentive provision.

Cash realization and working capital timing

Cash realization ratio was 95%, below aspiration (>100%), driven by a working capital outflow (payables timing in NZ and cash settlement of remediation provisions) and cash tax timing differences. Dividends in H1 declined 53.5% YoY due to prior-year special dividend.

Company Guidance

Management reaffirmed they are on track to deliver mid‑ to high‑single‑digit reported EBIT growth in Australian Food for FY26 and an improved result in New Zealand Food and BIG W, and reiterated a medium‑term ambition of mid‑ to high‑single‑digit EBIT growth supporting a double‑digit total shareholder‑return target. They confirmed FY26 operating capex of ~$2.0bn (H1 operating capex $913m), reported H1 group sales $37.1bn (+3.4%), group EBIT before significant items $1.7bn (+14.4%), NPAT before significant items $859m (+16.4%) and EPS $0.704 (+16.4%), with H1 operating cash flow before interest and tax $3.2bn (+4.5%) and a cash realization ratio of 95%. Management also flagged delivery of the $400m run‑rate cost savings by December, H1 significant items of $698m (award remediation), eCommerce sales +14.6% and a 93% increase in eComX directly attributable profit, net debt/EBITDA of 2.7x, and a final dividend of $0.45 per share (up 15.4%).

Woolworths Group Ltd Financial Statement Overview

Summary

Mixed fundamentals: the income statement shows pressure from a large revenue decline and very low net margin, while cash flow improved with strong free cash flow growth. Balance sheet leverage is a notable risk (debt-to-equity 3.58), partly offset by strong ROE (19.81%).

Income Statement

Neutral

Woolworths Group Ltd has faced challenges in maintaining revenue growth, with a significant decline of 20.2% in the latest year. The gross profit margin remains stable at around 27%, but the net profit margin is low at 1.39%, indicating limited profitability. The negative EBIT margin suggests operational inefficiencies or extraordinary expenses impacting earnings.

Balance Sheet

Neutral

The company has a high debt-to-equity ratio of 3.58, indicating significant leverage which could pose financial risks. However, the return on equity is relatively strong at 19.81%, suggesting effective use of equity to generate profits. The equity ratio is not provided, but the high leverage remains a concern.

Cash Flow

Neutral

Woolworths has shown a strong free cash flow growth rate of 61.89%, reflecting improved cash generation. The operating cash flow to net income ratio is 0.37, indicating adequate cash flow relative to net income. However, the free cash flow to net income ratio of 0.44 suggests room for improvement in converting income to free cash flow.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	70.28B	69.08B	67.92B	64.29B	60.85B	55.73B
Gross Profit	16.61B	18.82B	18.55B	17.18B	18.04B	16.33B
EBITDA	4.58B	4.57B	3.53B	5.36B	4.51B	4.90B
Net Income	598.00M	963.00M	108.00M	1.62B	1.55B	2.07B
Balance Sheet
Total Assets	34.39B	33.83B	33.94B	37.18B	33.27B	39.24B
Cash, Cash Equivalents and Short-Term Investments	1.29B	1.27B	1.30B	1.14B	1.03B	1.01B
Total Debt	26.99B	17.39B	16.72B	15.73B	16.76B	14.89B
Total Liabilities	29.63B	28.87B	28.37B	30.61B	27.17B	37.50B
Stockholders Equity	4.63B	4.86B	5.41B	6.42B	5.98B	1.38B
Cash Flow
Free Cash Flow	2.34B	2.02B	1.81B	2.28B	1.01B	2.25B
Operating Cash Flow	4.95B	4.55B	4.36B	4.80B	3.43B	4.64B
Investing Cash Flow	-2.86B	-1.93B	-2.31B	-1.89B	-2.51B	-2.21B
Financing Cash Flow	-2.09B	-2.65B	-1.92B	-2.81B	-1.34B	-3.04B

Woolworths Group Ltd Technical Analysis

Technical Analysis Sentiment

Positive

Last Price36.90

Price Trends

50DMA

31.13

Positive

100DMA

29.55

Positive

200DMA

29.81

Positive

Market Momentum

MACD

1.45

Negative

RSI

83.43

Negative

STOCH

97.45

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 36.9 is above the 20-day moving average (MA) of 32.85, above the 50-day MA of 31.13, and above the 200-day MA of 29.81, indicating a bullish trend. The MACD of 1.45 indicates Negative momentum. The RSI at 83.43 is Negative, neither overbought nor oversold. The STOCH value of 97.45 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 (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MTS	65 Neutral	AU$3.62B	12.74	17.17%	5.47%	4.74%	6.60%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
COL	62 Neutral	$28.67B	28.16	28.51%	3.24%	1.84%	-3.62%
WOW	55 Neutral	$44.89B	75.34	18.56%	2.86%	1.70%	796.48%

* Consumer Defensive Sector Average

Performance Comparison

AU:WOW

Woolworths Group Ltd

36.90

8.63

30.53%

AU:COL

Coles Group

21.36

2.72

14.60%

AU:MTS

Metcash Limited

3.29

0.38

12.98%

Woolworths Group Ltd Corporate Events

Woolworths lifts underlying profit and dividend despite hefty remediation hit

Feb 25, 2026

Woolworths Group reported half-year group sales of $37.1 billion, up 3.4%, with EBIT before significant items rising 14.4% as all segments delivered sales and earnings growth, supported by cost reductions and strong e-commerce expansion. The company lifted NPAT before significant items by 16.4% and increased its fully franked interim dividend by 15.4%, but after significant items—mainly a large remediation provision following a Federal Court ruling—NPAT fell 49.4%, highlighting both operational momentum and the financial impact of legacy issues while management focuses on value, fresh food, convenience and rebuilding customer trust in a highly competitive market.

Australian Food delivered stronger Q2 trading, with 3.6% sales growth for the half, expanding EBIT margins and robust contributions from e-commerce, media, rewards and services, while New Zealand Food, Australian B2B and W Living (including BIG W and Petstock) also improved profitability. With customer metrics improving and market share stabilising, Woolworths has achieved a $400 million run-rate in cost savings and signals continued emphasis on value, productivity and strategic execution to sustain growth and support shareholders despite the drag from significant one-off remediation charges.

The most recent analyst rating on (AU:WOW) stock is a Hold with a A$31.00 price target. To see the full list of analyst forecasts on Woolworths Group Ltd stock, see the AU:WOW Stock Forecast page.

Woolworths Group Declares Interim Dividend of AUD 0.45 per Share

Feb 25, 2026

Woolworths Group Limited has declared an ordinary dividend of AUD 0.45 per fully paid share for the six-month period ended 4 January 2026, reinforcing its ongoing commitment to shareholder returns. The dividend will trade ex on 4 March 2026, with a record date of 5 March and payment scheduled for 2 April 2026, alongside a dividend reinvestment plan election deadline set for 6 March, giving investors clarity on near-term income and reinvestment options.

The most recent analyst rating on (AU:WOW) stock is a Hold with a A$31.00 price target. To see the full list of analyst forecasts on Woolworths Group Ltd stock, see the AU:WOW Stock Forecast page.

Woolworths Lifts Underlying Profit but Takes $710m Payroll Hit in Half-Year

Feb 25, 2026

Woolworths Group has reported its half-year results to 4 January 2026, posting revenue of $37.1 billion, up 3.4%, while profit attributable to equity holders before significant items rose 16.4% to $859 million. Statutory profit fell 49.4% to $374 million, largely due to a $710 million payroll remediation provision related to award-covered salaried store team leaders.

The board declared a fully franked 2026 interim dividend of 45 cents per share, matching the prior final dividend and implying an anticipated payout of $550 million, with the dividend reinvestment plan remaining active and unfettered by discounts or caps. Net tangible assets per share declined to 6.2 cents from 24.8 cents a year earlier, and the group added two new Australian subsidiaries during the period, reflecting ongoing corporate structuring amid the financial impact of remediation.

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 Strengthens Board with Silicon Valley Technologist as Director Retires

Jan 28, 2026

Woolworths Group has announced the appointment of Jon Alferness as a non-executive director to its board effective 1 March 2026, pending licensing approvals, coinciding with the retirement of current director Tracey Fellows on the same date. Alferness brings more than two decades of technology and product leadership experience from roles at Walmart, Google and Lyft, including as Executive Vice President and Chief Product Officer for Walmart US, where he led integration of advanced digital capabilities across e-commerce, financial services, health, and last-mile delivery. His background in shaping Google Ads across search, mobile, shopping and travel, along with experience in digital transport, payments and digital finance, is expected to bolster Woolworths’ board expertise in digital, media and e-commerce as the food and grocery sector undergoes rapid technological transformation. Chair Scott Perkins highlighted that Alferness’ appointment positions the group to better navigate evolving customer expectations and industry shifts, while expressing appreciation for Fellows’ contributions in digital and member platforms during her board tenure. Alferness will stand for election at Woolworths Group’s 2026 Annual General Meeting.

The most recent analyst rating on (AU:WOW) stock is a Buy with a A$37.00 price target. To see the full list of analyst forecasts on Woolworths Group Ltd stock, see the AU:WOW Stock Forecast page.

Woolworths Group Updates Director’s Interest Notice

Dec 17, 2025

Woolworths Group Limited has announced a change in the director’s interest notice for Tracey Fellows, with no changes in the number of ordinary shares held. However, there was an acquisition of 340 NED Share Rights, bringing the total to 701. This update reflects the company’s ongoing management of director interests and equity plans, ensuring transparency and compliance with corporate governance standards.