Woolworths Group Ltd (ASX: WOW) shares are outperforming during the broader market sell-down today.
Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed yesterday trading for $30.07. In earlier trade on Tuesday, shares were up 0.8% at $30.30 apiece. At the time of writing, shares have slipped to $30.03 apiece, down 0.1%.
For some context, the ASX 200 is down 1.0% at this same time. The market is feeling the heat as US President Donald Trump forges ahead with 25% tariffs on exports from Mexico and Canada and an additional 10% tariff imposition on exports from China.
Taking a step back though, and as you can see in the chart below, Woolworths shares have underperformed the benchmark over the past full year, falling 8.0% compared to the 5.5% 12-month gain posted by the ASX 200.
With shares now down some 18% from the recent 28 August highs, and with the supermarket giant reporting $35.9 billion in sales for the half year (H1 FY 2025), is the stock now undervalued?
Image source: Getty Images
Are Woolworths shares a buy?
Commenting on Woolworths' half-year results, MPC Markets' Mark Gardner noted that (courtesy of The Bull):
Group net profit after tax of $739 million in the first half of fiscal year 2025 was down 20.6% on the prior corresponding period. The interim dividend of 39 cents was cut by 17%.
But it wasn't all bad news for Woolworths shares.
"Encouragingly, group sales of $35.9 billion grew by 3.7%," Gardner said.
He added that the early weeks of calendar year 2025 are also pointing to growth:
The company announced Australian food total sales growth of 3.3% in the first seven weeks of the second half of fiscal year 2025. It attributed the growth to a more stable trading environment following the recovery from industrial action in late 2024.
And, in answer to our headline question, Gardner concluded, "The shares appear undervalued, in my view."
But Gardner isn't ready to pull the trigger just yet, with a hold recommendation on Woolworths stock.
A more bullish take
Goldman Sachs counts among the brokers with a more bullish take on Woolworths shares.
Following on Woolies' half year results, Goldman said, "We reiterate Buy as we see early signs of a refocus on productivity and increased precision execution driving promotional effectiveness."
Goldman has a target price of $36.10 on Woolworths shares. That implies a potential upside of more than 20% from current levels, not including those upcoming dividends.
