Woolworths Group Limited (ASX:WOW) Half-Yearly Results: Here's What Analysts Are Forecasting For This Year

It's been a good week for Woolworths Group Limited (ASX:WOW) shareholders, because the company has just released its latest interim results, and the shares gained 2.2% to AU$40.08. Woolworths Group reported in line with analyst predictions, delivering revenues of AU$36b and statutory earnings per share of AU$0.90, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Woolworths Group

Following last week's earnings report, Woolworths Group's 13 analysts are forecasting 2021 revenues to be AU$67.3b, approximately in line with the last 12 months. Statutory earnings per share are predicted to shoot up 35% to AU$1.52. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$67.0b and earnings per share (EPS) of AU$1.48 in 2021. So the consensus seems to have become somewhat more optimistic on Woolworths Group's earnings potential following these results.

The consensus price target was unchanged at AU$42.69, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Woolworths Group analyst has a price target of AU$53.20 per share, while the most pessimistic values it at AU$29.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Woolworths Group's revenue growth is expected to slow, with forecast 0.3% increase next year well below the historical 4.3%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.4% next year. Factoring in the forecast slowdown in growth, it seems obvious that Woolworths Group is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Woolworths Group following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Woolworths Group's revenues are expected to perform worse than the wider industry. The consensus price target held steady at AU$42.69, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Woolworths Group analysts - going out to 2025, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Woolworths Group .

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