I'm sure every investor wants to receive good returns from their portfolio. Should Woolworths Group Ltd (ASX: WOW) be a part of an Aussie's portfolio right now? Can it deliver a market-beating performance from here?
Woolworths is best known as being Australia's largest supermarket company, though it also has a number of other businesses including Petstock, BIG W and a business to business (B2B) food supply division (with PFD being the major contributor).
The impacts of inflation has affected investor thoughts on Woolworths over the years. The company has worked hard to regain customer and investor confidence.
After rising 27% over the past year (at the time of writing), it is an appropriate time to consider Woolworths' future prospects.
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Woolworths share price target
A share price target indicates where analysts expect the share price to be 12 months from the time of the investment call.
According to CMC Invest, there have been 11 ratings on the business within the last three months. Of those 11 analyst calls, three were a sell rating, six were a hold rating and two were a buy rating.
The average price target of those 11 analysts was $36.18, suggesting a possible drop of 8% over the next year (at the time of writing. The most negative price target was $32, suggesting a possible decline of 18%, while the most optimistic price target was $39.50, suggesting little movement of the valuation in the year ahead.
Don't forget the dividend
The change in the Woolworths share price is only part of the return shareholders may see over the next year. The dividend payment will also play its part, it just depends how large it is.
According to the projection on Commsec, the business is forecast to pay an annual dividend per share of $1.13 in FY27. That translates into a possible dividend yield of 2.9% excluding franking credits and 4.1% including franking credits.
While that potential passive income isn't huge, it could help offset some of the projected decline of the Woolworths share price, though that isn't guaranteed to happen, of course.
The annual dividend is then forecast to rise again to $1.28 in the 2028 financial year, suggesting pleasing passive income in the future.
Woolworths share price valuation
According to the forecast on Commsec, the business is projected to generate $1.48 of earnings per share (EPS) in FY27.
That means it's now valued at 27x FY27's estimated earnings. For analysts, this doesn't seem to be attractive enough, so other ASX shares could be more appealing.
