For Woolworths Limited (ASX: WOW) shareholders, it’s become a question of “by how much?”

Source: Google Finance

Source: Google Finance

By how much: “Will Woolworths shares underperform Wesfarmers Ltd (ASX: WES)?”

Indeed, as can be seen above, the Woolworths share price performance couldn’t be starker to Wesfarmers in recent times.

Over the past 24 months alone, in fact, Woolworths’ share price has underperformed Wesfarmers’ share price by a huge 34%. In 2016 alone, that difference is more than 10% – already.

What’s going on?

The divergence between the two companies’ share prices boils down to their profit performances.

Woolworths’ Home Improvement business, which includes Home Timber and Hardware and Masters, is loss making and due to be sold. Meanwhile, Wesfarmers’ Bunnings Warehouse is stronger than ever.

Woolworths supermarkets, which have historically boasted high-profit margins, are now losing ground to Wesfarmers’ Coles.

Big W, owned by Woolworths, has struggled to reinvigorate its product offering as Wesfarmers’ Kmart powers ahead.

So what’s the result of all this?

In the five years since 2010, Woolworths’ net profit has grown 6.1%, while Wesfarmers’ profit is up 55%.

Is it time to buy Wesfarmers or Woolworths?

While Woolworths appears to have a tough road ahead, Wesfarmers seems to be going from strength to strength. However, if you want to buy shares in the latter company you’ll have to pay a premium valuation.

Foolish takeaway

Wesfarmers’ shares appear fairly valued at today’s prices, but if you’re investing for the long term, there are compelling reasons to hold a reputable blue-chip dividend share like Wesfarmers — especially during times of heightened volatility. On the other hand, if you decide to buy Woolworths shares today, you’d have to be very confident in management’s ability to turn its fortunes around. I’m no longer sure that’ll happen.

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Motley Fool writer/analyst Owen Raszkiewicz has a financial interest in Woolworths. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.