Is the Woolworths share price a buy ahead of this month's AGM?

It's been a difficult time for the supermarket giant.

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Key points
  • Woolworths shares have been on a spasmodic journey this year to date
  • Investors have pushed the share to 52-week lows in an extended downtrend since August
  • Woolworths shares are down 13% this year to date

Shares of Woolworths Group Ltd (ASX: WOW) are rangebound today and are currently trading flat at $33.05 cents apiece.

After a rollercoaster year on the charts, the Woolworths share price has now receded to 52-week lows. This follows a heavy sell-off period from August to date.

Noteworthy is that the company will also hold its annual general meeting (AGM) on 26 October.

As seen below, the share has tracked the benchmark S&P/ASX 200 Index (ASX: XJO) very closely these past 12 months.

TradingView Chart
A woman ponders over what to buy as she looks at the shelves of a supermarket.

Image source: Getty Images

Is Woolworths a buy?

Woolworths shares trade on a price-to-earnings (P/E) ratio of 25.6 times and are also priced at a price-to-cashflow (P/CF) ratio of 11.3 times. Each of these is ahead of the industry median of 7.9 times and 3.14 times, respectively.

Although, the company did deliver a return on equity (ROE) of 39.7% last filing. That was ahead of peers Coles and Wesfarmers at 35% and 26.6%, respectively.

However, these are historical numbers, and the company's AGM and annual report will reveal a lot more detail.

Analysts at Macquarie yesterday released the broker's 'event study' that suggests the AGM 'season' can provide a positive catalyst to share prices.

While Woolworths and many other names posted FY22 numbers in late August, the AGM and annual reports provide a unique insight into the performance of the first few trading months of the new financial year.

As a result, investors often reward companies on the back of any earnings surprise that may come as a result of the "mini reporting season", the broker says.

In its report released Wednesday, the broker posted its top 100 stocks with an outperform rating. These are the names it believes warrant a buy.

Woolworths was named on the list of consumer discretionary retail shares that Macquarie tips to outperform.

Underpinning the investment thesis, the broker notes the strength of the Australian economy. It suggests "consumer spending had not declined as feared", according to Bloomberg.

Meanwhile, Woolworths is rated as a buy from eight out of 15 analysts covering the share right now, according to Refinitiv Eikon data.

However, the share also has three sell ratings from this list. The consensus price target is $38.23, implying a small amount of upside yet to be realised if correct.

The Woolworths share price is down 13% this year to date.

Motley Fool contributor Zach Bristow 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 has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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