The Woolworths Group Ltd (ASX: WOW) share price is down today despite investment bank Jarden claiming yesterday that the company could grow its addressable market to more than $500 billion.
The Woolworths share price has dropped 0.82% to $37.29 at the time of writing.
Let's take a look at what has unfolded.
New revenue streams through growth initiatives
Woolworths has had a busy year in 2021, undertaking several growth initiatives to add fuel to the company's growth engine.
According to a report in the Australian Financial Review (AFR) yesterday, Woolworths chief executive Brad Banducci wants to generate additional revenue streams by building out the company's retail, supply chain and rewards segments.
To illustrate, back in February, the company launched an online learning and training platform which it eventually made accessible to adjacent retail and service industries.
In April, it released its plan to more than double its e-commerce product mix through the launch of a virtual marketplace, enabling third-party sellers to drive sales through Woolworths' website.
Later that month, it also established Q-Retail, a new business unit that brings together its data analytics capabilities with those of shopping insights platform Quantium. This followed Woolworths increasing its stake in Quantium to 75%.
Finally, in June, Woolworths also launched its financial services platform known as 'Wpay' as a standalone payments business segment. These moves come 14 years after it established its own in-house payments platform.
Analyst commentary
The AFR reports that Jarden analysts Ben Gilbert and Keegan Booysen believe Woolworths could "double its addressable market to more than $500 billion by expanding into areas outside the traditional food and everyday needs sectors and by leveraging its systems and expertise".
The analysts estimated the company's vertical businesses were already generating ~$100 million, including its:
- Cartology media interests
- Wpay for payments
- Supply chain operations via Primary Connect
- Data analytics through Quantium
- Plus other insurance/telco interests.
Gilbert and Booysen state in the equity research report:
"In our view Woolworths, along with Westfarmers, is the best positioned of Australian-listed corporates to capitalise on growing consumer brand trust to expand into right-to-play verticals and adjacencies."
Woolworths share price summary
The Woolworths share price has given a 12-month return of just under 1% at the time of writing, which has lagged behind the S&P/ASX 200 Index (ASX: XJO)'s return of ~21.5% over this same time.
Over the previous 5 sessions, the Woolworths share price has finished in the red, and has also finished in the red over the last 1 month by 13.94%.
The company's share price has also lagged the ASX 200's year-to-date return, by posting a loss of around 5% at the time of writing, compared to 9.3% for the index.
At a share price of $37.29, Woolworths has a market capitalisation of $47.2 billion, and trades at a price-to-earnings ratio of 37.52.
The share price is trading off its 52-week high of $44.06 but it sitting above its 52-week low of $35.96.
