Woolworths Group Limited (ASX:WOW) saw significant share price volatility over the past couple of months on the ASX, rising to the highs of A$27.5 and falling to the lows of A$24.92. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Woolworths Group’s current trading price of A$27.21 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Woolworths Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Woolworths Group
What is Woolworths Group worth?
The stock is currently trading at A$27.21 on the share market, which means it is overvalued by 43% compared to my intrinsic value of A$19.07. This means that the buying opportunity has probably disappeared for now. Furthermore, Woolworths Group’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What kind of growth will Woolworths Group generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Woolworths Group’s earnings over the next few years are expected to increase by 38.79%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Woolworths Group’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe Woolworths Group should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on Woolworths Group for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for Woolworths Group, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.