Australian ASX200 earnings preview WOW

Woolworths Group Ltd (WOW) is an Australian retail group operating primarily in the supermarket and grocery sector. Woolworths and Coles form a near-duopoly of Australian supermarkets, accounting for about 65% of the Australian market. It reports its full-year numbers on the 26th of August.

Australia

Woolworths is a defensive stock that benefitted from the arrival of COVID-19 in Australia last year as households stocked up on toilet paper, pasta, and other pantry items. The latest COVID-19 outbreak impacting Sydney, Melbourne and Canberra has seen another round of panic buying that recently pushed the share price of Woolworths above $42.00.


The rally above $42.00, coming despite the spin-off of the Endeavour Group, which includes Dan Murphy’s, BWS, and the largest hotel network in Australia. As explained by the Woolworths Chairman, the spin-off enhances “shareholder value through a greater focus on each business’ core customers offering and growth opportunities.” 

Woolworths shareholders received one Endeavour share for every Woolworths share they owned ahead of the spin-off. The Endeavour Group share price is currently trading near $7.00 per share. 

According to reports, Goldman Sachs analysts expect Woolworths to report full-year revenue of $55,414.5 million, a 12.5% decline compared against FY20. Earnings before interest and tax (EBITDA) are forecasted to come in at $2,795.9 million, down 13% from FY20 ($3,218.7 million). Goldman Sachs expect the company to pay a full-year dividend of 86 cents per share.

Last week’s rally to the $42.66 high, filled the gap following the Endeavour spin off in late June. The subsequent rejection reinforces the strong level of resistance between $43.00 and $44.00 and warns that a deeper pullback towards interim support at $38.00 is likely, possibly as a result of an easing in lockdown restrictions in October. 

Wow Daily Chart


Source Tradingview. The figures stated areas of the 25th of August 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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