Why the Woolworths (ASX:WOW) share price has outperformed Wesfarmers so far this year

It’s been another great year for Woolworths shareholders in 2021…

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The Woolworths Group Ltd (ASX: WOW) share price has been trotting on an upwards trajectory until recently. The conglomerate’s shares hit a record high of $42.66 on 20 August before some profit-taking swooped in.

Similarly, Wesfarmers Ltd (ASX: WES) has suffered the same fate although tracking lower around the same time. The company’s shares reached an all-time high of $67.20, also on 20 August.

However, when looking at year-to-date, Woolworths shares have edged 14% higher while Wesfarmers shares have gained 12%.

Woolworths expands customer offering, seizes growth opportunities

While many businesses have been severely impacted by COVID-19, it has been a different story for Woolworths.

The business has trialled or implemented a range of initiatives, focusing on customer convenience.

Last month, Woolworths announced it teamed up with Uber Eats to offer same hour grocery delivery across Australia. The partnership centred on delivering groceries, fruits and vegetables to customers at short notice.

Another feature, the contactless direct to boot pick-up service grew to 379 sites, bringing the total to 629 stores. Direct to boot offers customers the opportunity to order online and have a personal shopper fill the order in-store. The forward-thinking measure is another example the company has executed to attract new market share.

And if that’s not enough, Woolworths launched a trial of 4 temperature-controlled self-service lockers.

Clearly, the company is adapting and taking advantage of changing consumer trends during the pandemic. This has led to bumper earnings for Woolworths which has had an overall positive effect on its shares.

Is the Woolworths share price a buy?

Since the release of its full-year results, a number of brokers have weighed in on the company’s shares.

Australia’s leading investment house, Morgans, raised its price target for Woolworths shares by 4.9% to $38.40. Following suit, Macquarie had a more bullish outlook, adding 7.8% to $41.50.

Furthermore, analysts at Citi increased its rating by 2.6% to $40.60 apiece. Based on the current Woolworths share price of $39.66, this implies a slight upside of 2.3%.

Woolworths has a price-to-earnings (P/E) ratio of 32.57, meaning investors are willing to pay $32.57 for every $1 in earnings. It’s evident there are high-growth expectations for the company in the near-term future.

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

Before you consider Woolworths, you'll want to hear this.

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Motley Fool contributor Aaron Teboneras 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 Wesfarmers Limited. 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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