Down 12% over the past year, is the Woolworths share price a dead duck?

Is this a buy-the-dip opportunity for one of the ASX's largest shares?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It has not been a good time for the Woolworths Group Ltd (ASX: WOW) share price in recent months. At the time of writing, this ASX 200 supermarket operator and blue chip share is trading at $32.14 a share, down 1.08% for the day.

This pricing puts Woolworths shares down 11.85% over the past 12 months. Woolworths is also down an even worse 14.3% year to date. Since the company's last 52-week high of $40.35 (reached in June last year), investors have now weathered a drop of over 20%.

So can we now call the Woolworths share price a dead duck?

a woman ponders products on a supermarket shelf while holding a tin in one hand and holding her chin with the other.

Image source: Getty Images

Why is the Woolworths share price on the nose?

Woolworths has just had one of the roughest months in recent history. For one, its half-year earnings results that were released back on 21 February were arguably a little lacklustre.

The company reported a 4.4% rise in revenues to $34.64 billion. However, Woolworths also delivered a loss after significant items of $781 million, driven by a $1.5 billion writedown of its New Zealand business.

It didn't help that at the same time, Woolworths' long-serving CEO, Bradford Banducci, unexpectedly announced his resignation.

Banducci had an awkward interview walkout just a few days prior. So although he made pains to state that this resignation had been in the pipeline for a while, the optics certainly weren't good.

When investors were presented with these two events, they responded by taking the Woolworths share price by almost 7% in one day. This almost single-handedly explains why the Woolworths share price had such a rough trot over the past 12 months.

Are Woolies shares a buy or a dead duck today?

Well, one ASX expert who thinks Woolies shares are far from being dead (or a duck) is broker Goldman Sachs. As my Fool colleague James covered earlier this month, Goldman views Woolies as a top buy right now.

Following the company's recent earnings (and leadership shakeup), Goldman labelled the company as a 'conviction buy', and gave it a 12-month share price target of $40.40.

Here's how the broker justified its bullishness:

[We] believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as its ability to pass through any cost inflation to protect its margins, beyond market expectations.

No doubt nervous Woolworths investors will take some comfort from those views. But we'll have to wait and see what happens over the next 12 months.

At the current Woolworths share price, this ASX 200 blue-chip stock has a market capitalisation of $39.7 billion, with a dividend yield of 3.26%.

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 positions in and has recommended Goldman Sachs Group. 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.

More on Consumer Staples & Discretionary Shares

A smiling woman at a hardware shop selects paint colours from a wall display.
Broker Notes

Wesfarmers shares: Buy, hold or sell?

A leading analyst delivers his verdict on Wesfarmers shares.

Read more »

A couple sits on the bed in their hotel room wearing white robes, both have seen the bad news on their phones.
Consumer Staples & Discretionary Shares

EVT flags FY26 EBITDA growth amid hotel strength and portfolio changes

EVT expects EBITDA growth for FY26, with hotels leading performance and ongoing portfolio upgrades supporting future results.

Read more »

Happy smiling young woman drinking red wine while standing among the grapevines in a vineyard.
Consumer Staples & Discretionary Shares

Why is everyone buying this beaten-down ASX wine stock now?

Execution will determine if this rally has legs.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock is sinking 15% on CEO change

The online furniture retailer has announced a leadership change today.

Read more »

Woman customer and grocery shopping cart in supermarket store, retail outlet or mall shop. Female shopper pushing trolley in shelf aisle to buy discount groceries, sale goods and brand offers.
Broker Notes

Should you buy Woolworths shares for the 'steady dividends'?

A leading analyst provides his outlook for Woolworths rebounding shares.

Read more »

A close up of a casino card dealer's hands shuffling a deck of cards at a professional gambling table with the eager faces of casino patrons in the background.
Share Gainers

Why is everyone buying Tabcorp shares this week?

Here's what is driving the latest price momentum for Tabcorp shares, and what to expect next.

Read more »

A group of people clink wine glasses in an outdoor, late afternoon setting to celebrate the rising Treasury Wine share price
Consumer Staples & Discretionary Shares

Why are Treasury Wine shares rocketing 16% today?

Investors are piling into Treasury Wine shares on Wednesday. But why?

Read more »

A happy couple drinking red wine in a vineyard.
Consumer Staples & Discretionary Shares

Treasury Wine Estates improves depletions and unveils regional model

Treasury Wine Estates improves depletions momentum and announces a new global operating model alongside key leadership changes.

Read more »