Should I buy Woolworths shares following the ASX 200 supermarket giant's latest results?

Here's how one ASX broker rates Woolworths after its earnings.

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One of the blockbuster ASX 200 earnings reports this week came from the blue-chip giant Woolworths Group Ltd (ASX: WOW). Woolworths reported its earnings for the first half of FY2023 (the six months to 31 December) just yesterday. 

Investors clearly liked what the supermarket kingpin had to say. By the end of yesterday's trading session, the Woolworths share price had vaulted a solid 1.99% higher to $37.45 a share:

Created with Highcharts 11.4.3Woolworths Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

This was understandable, seeing as Woolworths put up some pretty strong numbers.

As we went through at the time, the grocer reported a 4% rise in sales to $33.17 billion. Earnings before interest and tax (EBIT) rose 18.4% to $1.64 billion, while net profit after tax (NPAT) spiked 14% to $907 million.

Income investors would have been especially tickled. Woolies upped its interim dividend substantially. The company is soon set to pay out 46 cents per share, fully franked. That's a 17.9% lift over last year's corresponding dividend payment.

Even better, Woolworths also told investors that in the first seven weeks of the half-year ending 30 June this year, Australian food sales are up 6.5% against last year's numbers. New Zealand food sales have lifted 6.3% and Big W sales by a pleasing 9.7%.

So all in all, it was arguably a very solid earnings report from Woolies. As we noted yesterday, the company outperformed most of the market's expectations, which would have delighted investors even further.

But this begs the question: is the Woolworths share price a buy, now that these earnings have seen the light of day?

Is the Woolworths share price a post-earnings buy right now?

Well, one ASX broker who thinks so is Goldman Sachs. Earlier this month, we looked at Goldman's buy rating on Woolies shares.  

And yesterday, the broker argued that these earnings contained nothing to dent its confidence.

Here's some of what Goldman said on Woolworths' half-year results:

The margin outcome for Australia Supermarket and the better than expected run-rate in 2H23 first 7 weeks is the bright spot…

Overall we continue to believe that the more advantaged omni-channel execution capability of WOW will continue to drive longer term market share gains and cost efficiencies for EBIT margin expansion. Reiterate Buy.

Goldman has maintained its buy rating on Woolies shares, together with its 12-month share price target of $41.20. If that target is realised in the next year, investors would enjoy a 10% upside from where the shares are today. That doesn't include any returns from Woolworths' fully-franked dividends either.

So that's at least one ASX broker who rates Woolworths shares as a post-earnings buy. We'll have to wait for what the next 12 month has in store to see if Goldman is on the money. But no doubt investors will be pleased as punch with that assessment.

At the last Woolworths share price, this ASX 200 grocery giant has a market capitalisation of $45.56 billion, with a dividend yield of 2.46%.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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