Woolworths Group Ltd (ASX: WOW) shares have dropped 11% this year to date, as the grocery giant deals with a number of headwinds.
Shares are currently trading at $33.05, sliding more than 5% in the past month alone.
But is the stock actually worth its current price? And is now the time to head to the store to pick up some Woolworths shares? Let's see what the experts think.
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Why Woolworths shares could be a buy
Woolworths is Australia's largest supermarket chain, serving millions of customers each week through its extensive network of grocery stores, and Big W.
Goldman Sachs believes the company's long history and "consumer stickiness" could help it gain further market share.
The broker rates Woolworths shares a buy with a price target of $38.90. It cites Woolworths' ability to pass on cost increases to its customers – something that protects margins in a high-inflation environment.
Goldman sees the company as "value entry level", labeling the grocery giant a "high-quality and defensive stock."
But the past year hasn't been smooth sailing for Woolworths or its shareholders. The company's FY 2024 results highlighted some of the challenges it faced.
We also can't overlook that Woolworths is dealing with legal action from the Australian Competition and Consumer Commission (ACCC), along with main rival Coles Group Ltd (ASX: COL), accused of misleading discount pricing claims on supermarket products.
But this doesn't change anything about the fundamentals of the company.
So much so that Seneca Financial Solutions believes these concerns have been factored into the current valuation of Woolworths shares.
The fund suggests Woolworths could be an ideal pick for "the longer-term investor".
Dividend potential could sweeten the deal
And it would seem several brokers agree with Seneca's view. More so when it comes to the dividend potential for Woolworths shares.
The company rewarded shareholders with a total payout of $1.44 per share over the FY24 period.
Goldman Sachs sees further upside in Woolworths' dividend outlook. The broker expects fully franked dividends of $1.08 per share in FY25 and $1.19 per share the year after.
This would translate to yields of approximately 3.3% and 3.6%, at the time of publication respectively.
Combined with its price target of $38.90, this implies a total shareholder return of approximately 20% over the next twelve months.
Foolish takeaway
Woolworths shares have faced their fair share of challenges in 2024. However, experts say that the current dip might present a chance for long-term investors to pick up a quality ASX 200 stock at a discount.
Over the past 12 months, the stock is down 9%.
