Woolworths Group Ltd (ASX: WOW) shares will be on watch next week.
That's because the retail giant will be releasing its highly anticipated FY 2023 results on 23 August.
But what is the market expecting from Woolworths? Let's find out.
Woolworths FY 2023 results preview
According to a note out of Goldman Sachs, its analysts are expecting Woolworths to deliver a strong result next week.
On the top line, the broker is expecting revenue to come in at $64,046.37 million, which will be a 5.25% increase year on year.
The good news is that Woolworths' earnings growth is expected to be even stronger. Goldman advised:
WOW will report FY23 earnings on the 23rd of August. Key reason for our more positive estimates include better than expected margins compared to key competitor COL.
This is expected to result in EBITDA of $5,579.9 million and net profit of $1,714.8 million, which will be an increase of 10.5% and 13.25%, respectively, over the prior corresponding period.
Finally, a full-year dividend of $1.06 per share is expected by the broker. This will be up 14% from 93 cents per share in FY 2022.
Are Woolworths shares good value?
Goldman Sachs believes that Woolworths shares are great value at the current level. Especially in comparison to rival Coles Group Ltd (ASX: COL). It said:
As stockout levels continue to normalise towards pre covid levels, we expect WOW to be able to leverage supply chain investments more consistently than previous periods. We view the 25.7x FY24E P/E as a value entry point compared to COL, which is trading at a 23.5x. The ~2.2x FY24E P/E premium for WOW compared to COL is below the long term ~4x P/E point premium.
Its analysts have a buy rating and a $42.20 price target on the company's shares.
