Woolworths Group Ltd (ASX: WOW) shares are pushing higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed yesterday trading for $27.74. In late morning trade on Tuesday, shares are swapping hands for $27.79 apiece, up 0.2%.
For some context, the ASX 200 is down 0.5% at this same time.
Over the past year, however, Woolworths shares have underperformed the benchmark. Shares are down 19.8% in 12 months, compared to the 10.2% one-year gains posted by the ASX 200.
Though this doesn't include the 84 cents a share in fully franked dividends Woolworths paid (or shortly will pay) to eligible investors over the year.
At the current share price, that sees Woolworths stock trading on a 3.0% fully franked dividend yield.
While the year just past has been difficult for Woolies shareholders, Red Leaf Securities' John Athanasiou believes now could be an opportune time to buy the stock (courtesy of The Bull).
Image source: Getty Images
Why Woolworths shares could be set to rebound
"The supermarket giant's results in full year 2025 disappointed the market," said Athanasiou, who has a buy recommendation on the ASX 200 supermarket.
Drilling into those results, he said:
Group sales before significant items were up 3.6% on a normalised basis when compared to the prior corresponding period, but group earnings before interest and tax on a normalised basis fell 12.6%. The shares closed at $33.42 on August 26, the day before the results. The shares were trading at $27.525 on September 4.
Indeed, Woolworths shares closed down a precipitous 14.7% on 27 August as investors pored over those results.
"In our view, investor reaction appears excessive," Athanasiou said.
Citing the first reason the stock is a buy, he said, "The company remains Australia's leading supermarket chain, benefiting from brand equity, scale and defensive characteristics that support earnings resilience."
Then there's the company's rapidly growing e-commerce business.
"Investments in digital and e-commerce position Woolworths for structural growth as consumer habits shift online," Athanasiou noted.
In FY 2025, Woolworths' e-commerce sales were a standout performer, leaping 17.1% from FY 2024 to $9.1 billion.
As for the third reason the company looks well-placed to rebound, Athanasiou said, "Cost pressures should ease as inflation moderates, supporting margin recovery."
In FY 2025, Woolies reported a gross margin of 27.2%, down 0.08% year on year on a normalised basis.
Which brings us to the fourth reason you may want to buy Woolworths shares today.
Athanasiou concluded:
Strong cash flow, a healthy balance sheet and consistent dividends make WOW appealing for income-focused investors. The share price offers an attractive entry point into a defensive staple with long term growth levers and reliable shareholder returns.
