Woodside Energy Group Ltd (ASX: WDS) shares will be on watch next Tuesday.
That's because the energy giant will be handing down its first half report card on that day.
Let's now see what analysts at Goldman Sachs are expecting from Woodside when it releases its results on 27 August.
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Woodside half-year results preview
Goldman Sachs is expecting Woodside to deliver a strong profit result next week. Though, this is partly due to asset sales.
The broker has pencilled in a 12% increase in half year earnings before interest, tax, depreciation, and amortisation (EBITDA) to US$4.41 million. This assumes US$315 million of other income, which includes proceeds from the partial Scarborough sale to LNG Japan.
Its underlying net profit after tax growth is expected to be even stronger. Goldman explains:
We revise our 1H24 underlying NPAT +87% to US$1.74 bn primarily adjusting for the inclusion of sale proceeds as other income, and lower PRRT and income tax in line with WDS guidance. The lower tax expense has benefited from accounting adjustments which will materially reduce both statutory and underlying effective income tax rates for 1H24.
The broker believes this will allow the Woodside board to declare a fully franked 73 US cents per share interim dividend. This equates to 108.2 Australian cents per share and represents an 80% payout ratio.
And based on the current Woodside share price of $26.27, this will mean an attractive 4.1% dividend yield.
Should you buy Woodside shares?
Goldman sees a lot of value in the company's shares but continues to sit on the fence with its recommendation.
According to the note, the broker has retained its neutral rating and $33.50 price target. This implies potential upside of approximately 28% for Woodside shares over the next 12 months. And if you include dividends, the total potential return increases to approximately 35%.
Commenting on its recommendation, the broker said:
We are Neutral rated on WDS on: Ongoing Sangomar royalty risk: We remain cautious of potential changes to Sangomar royalty as Senegal's President has announced intentions to review terms, and where Sangomar comprises ~14% of our NAV. Limited near term production growth to offset gas price weakness: We expect production to remain relatively flat over 2024-2025 with a ~0% CAGR as Mad Dog 2 and Sangomar oil ramp up offsets existing decline at the North West Shelf and Bass Strait, leaving earnings largely exposed to softening LNG prices.
