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

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.