Whilst the grocery industry’s profitability is improving, (as the industry becomes more rational), we’re cautious on Woolworths’ share price due to valuation concerns.
Industry analysis shows Woolworths sales momentum is slowing. With the stock now trading 23 x consensus FY19 earnings, on a forward yield of 3.3%, there seems little margin for disappointment.
We continue to track Woolworths for a new “higher low” formation, at which point the stock will be added into the ASX 50 model at a discount to the current trading range.
Author: Leon Hinde
Leon has been working in the financial services industry for 18 years in management and advisory roles. Leon has extensive experience in general advice and dealings involving securities and derivative financial products.
PS 146 Securities & Derivatives, ADA 1 & 2 accreditation, Responsible Manager Certificate. Leon is authorised to provide financial product advice and deal with respect to the following financial products:
· Deposit Products
· Interest in managed investment schemes; and
· Government debentures, bonds and stocks