Woolworths Earnings: Australian Sales Momentum Building, but Cost Pressure Looms
A challenging trading environment took its toll on narrow-moat Woolworths in fiscal 2024. Group earnings declined 1% on the previous corresponding period, or PCP. Fiscal 2024 net profit after tax of AUD 1.7 billion was in line with our estimate, and our earnings forecasts are mostly unchanged. We lift our fair value estimate by 4% to AUD 28.50, largely reflecting the time value of money. Shares screen as overvalued. We believe a P/E of 26 at current prices and based on our fiscal 2025 earnings estimate is too expensive for a relatively low-growth, defensive yield stock. We forecast a five-year EPS CAGR of 5%.
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