Why the Woolworths (ASX:WOW) share price has outperformed Wesfarmers so far this year

It's been another great year for Woolworths shareholders in 2021…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Woolworths Group Ltd (ASX: WOW) share price has been trotting on an upwards trajectory until recently. The conglomerate's shares hit a record high of $42.66 on 20 August before some profit-taking swooped in.

Similarly, Wesfarmers Ltd (ASX: WES) has suffered the same fate although tracking lower around the same time. The company's shares reached an all-time high of $67.20, also on 20 August.

However, when looking at year-to-date, Woolworths shares have edged 14% higher while Wesfarmers shares have gained 12%.

retail shares

Woolworths expands customer offering, seizes growth opportunities

While many businesses have been severely impacted by COVID-19, it has been a different story for Woolworths.

The business has trialled or implemented a range of initiatives, focusing on customer convenience.

Last month, Woolworths announced it teamed up with Uber Eats to offer same hour grocery delivery across Australia. The partnership centred on delivering groceries, fruits and vegetables to customers at short notice.

Another feature, the contactless direct to boot pick-up service grew to 379 sites, bringing the total to 629 stores. Direct to boot offers customers the opportunity to order online and have a personal shopper fill the order in-store. The forward-thinking measure is another example the company has executed to attract new market share.

And if that's not enough, Woolworths launched a trial of 4 temperature-controlled self-service lockers.

Clearly, the company is adapting and taking advantage of changing consumer trends during the pandemic. This has led to bumper earnings for Woolworths which has had an overall positive effect on its shares.

Is the Woolworths share price a buy?

Since the release of its full-year results, a number of brokers have weighed in on the company's shares.

Australia's leading investment house, Morgans, raised its price target for Woolworths shares by 4.9% to $38.40. Following suit, Macquarie had a more bullish outlook, adding 7.8% to $41.50.

Furthermore, analysts at Citi increased its rating by 2.6% to $40.60 apiece. Based on the current Woolworths share price of $39.66, this implies a slight upside of 2.3%.

Woolworths has a price-to-earnings (P/E) ratio of 32.57, meaning investors are willing to pay $32.57 for every $1 in earnings. It's evident there are high-growth expectations for the company in the near-term future.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Consumer Staples & Discretionary Shares

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Consumer Staples & Discretionary Shares

This ASX 200 director bought over $500k of his company's shares just in time for the dividend!

Investors typically draw comfort from seeing board directors spend their own money buying more shares in the ASX 200 companies…

Read more »

Woman thinking in a supermarket.
Opinions

Should I buy Woolworths shares at $37?

Are Woolworths shares worth putting in the shopping basket?

Read more »

A man looks at his laptop waiting in anticipation.
Investing Strategies

Big lesson from reporting season: STAY AWAY from these ASX shares, says expert

Plus the one stock you will want to buy now to hold through the imminent economic turbulence.

Read more »

waving the chequered flag
Broker Notes

Start your engines: Fund backs 2 ASX shares to finish line

This pair of companies reported outstanding results during last month's reporting season. Celeste is predicting further gains.

Read more »

A little girl holds broccoli over her eyes with a big happy smile.
Consumer Staples & Discretionary Shares

Goldman Sachs says buy Woolworths stock for reliable dividends AND 10% share price growth

This broker can't recommend Woolies shares highly enough.

Read more »

A woman is excited as she reads the latest rumour on her phone.
Consumer Staples & Discretionary Shares

Lovisa is a 'phenomenon': broker urges investors to buy shares

This could be one of the best growth shares around according to one leading broker.

Read more »

A middle-aged woman sits in contemplation over a tablet device considering information about ASX shares and deep in thought.
Consumer Staples & Discretionary Shares

4 directors have been buying up this ASX 200 stock since the company reported

Should insider buying drive investor attention towards this stock?

Read more »

A couple in a supermarket laugh as they discuss which fruits and vegetables to buy
Consumer Staples & Discretionary Shares

Coles stock can deliver golden combo of share price growth plus dividends: Citi

Consumers are still shopping with Coles, helping grow its earnings.

Read more »