The Woolworths Group Ltd (ASX: WOW) share price will be under the microscope this week as the supermarket business releases its FY22 report on Thursday.
Plenty of S&P/ASX 200 Index (ASX: XJO) shares have already reported their results for the six or 12 months to 30 June 2022.
As one of Australia's biggest companies, with a market capitalisation of $47 billion according to the ASX, Woolworths is an interesting business to consider.
What should investors pay attention to with Woolworths' result?
Obviously, there will be a heavy focus on how much profit Woolworths makes.
Net profit: Every analyst will have different estimates on how much profit Woolworths is going to report for the 2022 financial year. On CMC Markets, Woolworths is predicted to generate earnings per share (EPS) of $1.20. That would put the current Woolworths share price at more than 31x FY22's projected profit.
But, I think there are a number of other areas that investors should look at with Woolworths.
Inflation passed through to customers: How much inflation Woolworths saw in the fourth quarter and how much of a boost to sales this caused will be interesting to see. Woolworths' comments about inflation expectations in FY23 could be particularly interesting and influential on investors' thoughts.
Cost inflation: However, Woolworths also has one of the biggest workforces in Australia. So, it will be interesting to see how much the company's wage bill has increased and if management makes any comments about that. Inflation won't be a positive for Woolworths shares and earnings if its costs are going up strongly as well. The costs of the supply chain could also have increased.
Retail expansion: Woolworths has been making moves to diversify and grow its business through acquisitions. For example, it's buying 80% of Mydeal.Com Au Ltd (ASX: MYD) with an offer that implied an enterprise value of $243 million. It also announced a $150 million deal to buy Shopper Media Group. It will be interesting to hear from Woolworths about its strategy with these acquisitions and whether it will be making further moves.
Trading update: There may be fears that the high rate of inflation means households reduce their spending in some areas. Will Woolworths' trading update and outlook commentary show that households continue to spend at the supermarket?
Woolworths share price latest
The Woolworths share price is essentially flat over 2022 to date, despite the various impacts of inflation and rising interest rates on investor sentiment.
Some investors are negative on the company heading into the result. For example, Credit Suisse currently rates Woolworths as 'underperform' with a price target of $32.03. That implies a drop of around 15% over the next year.
In late afternoon trading on Tuesday, the Woolworths share price is down 2.5% at $38.055.
