Where to next for the Woolworths (ASX:WOW) share price?

With grocery stores in the essential services category, Woolies has been able to keep operating through the lockdowns.

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Family having fun while shopping for groceries.

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The Woolworths Group Ltd (ASX: WOW) share price finished the day yesterday up 1.74%, closing at $38.55 per share.

Following a 1.94% gain on Wednesday, Woolies is trading at all-time highs.

In fact, the Woolworth share price is now 4.7% above where it was trading before COVID-19 torpedoed global markets. On 21 February 2020, Woolies closed at $36.81, at the time also a new record.

What now?

Some leading analysts believe the Woolworths share price may have be getting a little dear.

Credit Suisse, for example, downgraded Woolies to “underperform”. In a note, the broker pointed out Woolies is at a price to earnings (P/E) ratio of 30 times of its estimated 2022 financial year earnings.

Goldman Sachs, noting Woolies decision to divest its liquor and gaming business – now Endeavour Group Ltd (ASX: EDV) – also downgraded it to “neutral” with a price target of $36.80 per share. That’s about 4.6% below the current Woolworths share price.

Brad Banducci, Woolies’ CEO, likely has some different ideas about his company’s future value. As my Foolish colleague Mitchell Lawler wrote, Banducci plans “to generate additional revenue streams by building out the company’s retail, supply chain and rewards segments”.

Woolies already has a lengthy track record of doing so, including major expansions of its e-commerce platforms.

How has Woolworth’s share price moved this year?

The Woolworth’s share price is up 13.8% year-to-date. That handily outpaces the 9.8% gains posted by the S&P/ASX 200 Index (ASX: XJO).

At the current share price, Woolies has a market cap of $48 billion. The company pays a dividend yield of 2.7%, fully franked.

Should you invest $1,000 in Woolworths right now?

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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