Analysts Have Made A Financial Statement On Woolworths Holdings Limited's (JSE:WHL) Half-Year Report

Shareholders might have noticed that Woolworths Holdings Limited (JSE:WHL) filed its half-yearly result this time last week. The early response was not positive, with shares down 5.5% to R55.04 in the past week. Woolworths Holdings reported in line with analyst predictions, delivering revenues of R40b and statutory earnings per share of R2.89, 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.

See our latest analysis for Woolworths Holdings

Taking into account the latest results, the consensus forecast from Woolworths Holdings' eight analysts is for revenues of R80.5b in 2025. This reflects a reasonable 2.4% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be R3.24, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of R80.3b and earnings per share (EPS) of R4.14 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at R66.07, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values Woolworths Holdings at R74.00 per share, while the most bearish prices it at R55.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Woolworths Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 4.9% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 0.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 9.2% annually. So it's clear that despite the acceleration in growth, Woolworths Holdings is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Woolworths Holdings going out to 2027, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 1 warning sign for Woolworths Holdings that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.