The Woolworths Group Ltd (ASX: WOW) share price is still down 18.46% from the highs that we saw in February, going off the price Woolworths shares closed at on Friday.
Back in February (before the world turned upside down), Woolies shares reached an all-time high of $43.96. This morning, they are trading at $36.07 (at the time of writing).
This might seem strange at first glance. Woolworths is one of the few ASX companies that aren't seeing a drop off in sales in this difficult time due to the widespread panic buying of essentials we saw in February and March.
Because of this, Woolworths is likely to be one of the only ASX blue-chips not to have to cut its dividend payments in 2020.
So is this a bargain being presented for this grocery giant? Or have prices just returned to 'fair value'?
Are Woolworths shares a buy today?
So on a share price of $36.07, Woolies is trading on a price-to-earnings ratio of 17.96. The average for the S&P/ASX 200 Index (ASX: XJO) is currently around 14.7 – so there's certainly a premium here.
But here's a problem for Woolies. Supermarkets are not its only game. It also owns the Big W chain of discount stores as well as its Endeavor Group – which owns various networks of bottle shops and pubs (including Dan Murphy's and BWS).
The bottle shops would be doing ok right now, but the same sadly can't be said for the pubs. I'm not too sure Big W will be holding up too well either (although we'll have to wait and see).
And don't forget that although Woolworths' supermarkets have been experiencing a sales boom, there have also been massive costs associated with the coronavirus, such as the boosting of supply chain logistics and the hiring of additional staff.
All in all, I think the various factors at play here might play out with Woolworths only slight ahead, or even neutral for the first half of 2020.
And this is a mature, established company that wasn't expecting stellar earnings growth going forward either.
Foolish takeaway
I think Woolworths is a compelling buy for anyone looking for a safe dividend share on the markets right now. In saying that, I wouldn't call it a screaming bargain – even if Woolworths shares have come off the boil since February. It's still priced at a premium compared to the broader market, and I don't see significant growth for it in the years ahead.
