As one of the largest blue chip shares on the S&P/ASX 200 Index (ASX: XJO), the Woolworths Group Ltd (ASX: WOW) share price is one of the most-watched metrics on the share market. The fact that Woolies is one of the most prominent and popular brands in Australia wouldn't hurt either.
So Woolworths shares have had a pretty decent run over 2021 so far, despite the big dip we saw last week.
Investors have gotten the jitters over Woolies shares over the past week or so. The company gave the market a trading update last Tuesday, and the fallout wasn't pretty. The update covered the first half of FY2022. Despite recording modest growth across most of its business divisions (including a 2% increase in Australian Food sales), investors seemed to be concerned over Woolworths' cost base. Higher costs related to COVID-19 dragged on the Group's earnings before interest and tax (EBIT) over the period. By the end of that Tuesday's training, the Woolworths share price had fallen close to 8%.
As it stands today, Woolworths shares have risen a touch over 12.6% year to date. That doesn't include the company's dividend either. This would have added another 2%-3% to investors' returns. Compared to the ASX 200's 9% return year to date, that looks pretty pleasing. Also consider that Woolworths spun off Endeavour Group Ltd (ASX: EDV) this year as well. Seeing as investors received one Endeavour share for every Woolworths share owned, this would have boosted investors' returns even further.
So now Woolworths investors are about to put a relatively successful (touch wood) 2021 behind them, what does 2022 hold in store?
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What does 2022 hold in store for the Woolworths share price?
Well, as my Fool colleague James covered last week, one broker who isn't too keen on Woolworths going into next year is Morgans. Morgans took a look at the update Woolies gave, and wasn't too impressed.
This broker maintained its hold rating on Woolworths shares, and shaved its 12-month share price target to $36.65. That implies a potential future downside of roughly 3.73% over the next 12 months. The broker stated, "we think the 7.7% fall in the share price today reflects the disappointing trading update and WOW's elevated trading multiples, notwithstanding long term fundamentals remaining sound."
Of course, Woolworths shareholders might spend the first few months of the year finding out whether Woolworths will be successful in its pursuit of Priceline owner Australian Pharmaceutical Industries Ltd (ASX: API). Woolies is currently locked in a battle to take over API with its old rival Wesfarmers Ltd (ASX: WES). This could well dominate investors' attention next year.
For now, the Woolworths share price is trading at $38.17 a share, up 1.35% for the day so far this Monday. At this share price, Woolworths has a market capitalisation of $46.26 billion. It also offers a price-to-earnings (P/E) ratio of 31.3 and a dividend yield of 2.83%.
