Woolworths Group Ltd (ASX: WOW) shares are back in favour.
On Thursday, the supermarket giant's shares hit a 52-week high of $40.10.
That is a strong vote of confidence from the market, particularly after a difficult period for the retail sector more broadly.
Investors appear to be warming again to Woolworths' defensive qualities, its scale, and the resilience of supermarket spending.
But after such a strong move, is there still value left for investors?
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Why Woolworths remains attractive
Woolworths sits in one of the most dependable parts of the Australian economy.
Households may postpone major purchases when budgets are tight, but grocery spending is far harder to avoid.
That gives Woolworths a level of defensive strength that many ASX shares cannot match.
The company also has huge scale. Its supermarkets serve millions of customers each week, supported by a large store network, online operations, loyalty data, supplier relationships, and logistics infrastructure. That scale can be difficult to replicate.
But the valuation is no longer cheap
The main challenge is valuation. At current levels, Woolworths shares are trading on approximately 31 times expected FY 2026 earnings. This is based on forecast earnings per share of $1.30.
Looking ahead to FY 2027, analysts are expecting earnings per share of $1.48. That still places the stock on a forward price-to-earnings ratio of about 27 times.
Those are not bargain-level multiples. Investors are paying a premium for Woolworths' defensive profile, reliable customer demand, and long-term market position.
That may be justified if earnings growth improves from here. But it also means there is less room for disappointment.
If margins come under pressure, competition intensifies, or sales growth slows, the share price could be vulnerable after reaching a 52-week high.
Woolworths also remains relevant for income investors. Analysts are expecting dividends of 99.5 cents per share in FY 2026 and $1.13 per share in FY 2027. This represents dividend yields of approximately 2.5% and 2.8%, respectively.
That's not the largest dividend yield you'll find on the Australian share market, but it is welcome income for investors.
Are Woolworths shares a buy?
Woolworths remains a high-quality ASX blue chip. Its role in everyday household spending, national scale, and strong customer position make it a business that many investors would be comfortable owning for years.
But at a 52-week high, the easy value case has faded.
I would argue that Woolworths looks more like a quality hold than an obvious bargain at today's price, though long-term investors may still see appeal in its defensive earnings profile.
