The Woolworths (ASX:WOW) share price has gained 17% in the last 6 months

What has helped Woolworths deliver exceptional returns to shareholders lately?

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The Woolworths Group Ltd (ASX: WOW) share price has delivered the goods to shareholders over the last 6 months.

During the period, the supermarket giant’s shares rallied 17.7%. At the time of writing, the Woolworths share price is situated at $40.71 apiece.

Could there be more positive returns to come? Let’s recap what has been going on for the retail conglomerate to grasp the momentum.

Woolworths’ fresh full-year result

For the full year of the 2021 financial year, Woolworths performed exceptionally as sales grew and pandemic-related costs declined.

In FY21, group sales for the company rose 5.7% to $67,278 million compared to the prior year. Part of this strong headline growth figure was the combination of performance from the Australian Food and Big W segments.

Woolworths reported a group net profit after tax of $1,972 million before significant items, representing an increase of 22.9% on FY20. In addition, shareholders rejoiced in a bumped-up dividend of $1.08 per share for the year. This increase likely attracted some income investors, giving the Woolworths share price a boost.

Despite the commendable result, it wasn’t enough to impress analysts at Credit Suisse. The broker maintained its underperform rating and slashed its price target to $31.02. In providing reasoning for its move, the broker noted that it struggles to stomach the high price multiples that Woolworths is trading on.

Letting go of the baggage

Another possible catalyst for the Woolworths share price over the past 6 months involves its successful demerger from its liquor business. Given growing ESG pressures, Woolworths had decided to separate its Endeavour Drinks business from its core operations.

Many ESG funds filter out companies that promote the sale of alcohol. Having now removed that segment of the business, Woolworths has opened up the door to more potential investors.

Additionally, the split came at a time when Woolworths had come under pressure following its proposal to construct a Dan Murphy’s development at the Darwin airport. Following an independent review, it was found that Woolworths had not done enough to adequately consult all stakeholders on the proposal.

How does the Woolworths share price compare to Coles?

Both Woolworths and Coles Group Ltd (ASX: COL) have rewarded shareholders over the last 6 months. With regards to Coles, its share price has gained 14.5% during the period.

Looking at the price-to-earnings (P/E) ratios on both companies — Woolworths trades at ~33 times, while Coles is on a ~24 times multiple. While on paper Coles looks ‘cheaper’ compared to the Woolworths share price, the latter posted higher growth than the former.

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

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Motley Fool contributor Mitchell Lawler 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 COLESGROUP DEF SET. 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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