As ASX blue-chip stocks release highly anticipated earnings results, brokers and investors are adjusting their outlooks accordingly.
Earlier this week, Woolworths Group Ltd (ASX: WOW) released full-year results.
Key results included:
- Group sales rose 3.6% to $71.54 billion.
- EBITDA before significant items lifted 6.7% to $6.09 billion.
- EBIT before significant items increased 12.7% to $3.11 billion.
- NPAT before significant items jumped 15.4% to $1.60 billion.
- Final fully franked dividend of 52 cents per share, up 15.6% from last year.
Speaking on the results, Woolworths Group CEO Amanda Bardwell said:
The action we have taken in F26 to deliver more value for customers, greater convenience and better execution has improved customer advocacy and sales momentum in our key Australian Food business, particularly in H2. Sales momentum together with strong productivity and cost discipline has delivered solid EBIT growth with an increased contribution from all trading segments.
This prompted a positive reaction from the market, as Woolworths shares have climbed since the announcement.
However for prospective investors, it is worth noting that Woolworths shares have already climbed over 34% year to date, making it difficult to project big upside.
Image source: Getty Images
What are experts saying?
Yesterday, Woolworths shares closed at $39.55 per share.
The team at Bell Potter was impressed by the recent results and raised its price target to $42.35.
This indicates 7% upside.
Elsewhere, Morgans has a price target of $43.50, indicating a 10% upside.
However, let's not forget the recently updated forward dividend yield of 2.38%.
Taking all of this into consideration, if Woolworths shares were to reach the target set by Bell Potter in the next 12 months, the shares would be worth about $10,707.98, while the estimated dividends would add approximately $238, giving a total value of around $10,945.98, or a 9.46% total return.
If Woolworths shares reached the target set by Morgans, the investment would be worth approximately $10,998.74 plus the estimated $238 dividend, for a total of about $11,236.74, representing a 12.37% total return.
These calculations assume the 2.38% forward yield remains unchanged and dividends are taken as cash rather than reinvested; actual returns will vary with the share price and dividends paid
Why there might be more upside somewhere else
While these projections would be a healthy return, there is another ASX consumer staples stock worth considering over the next 12 months.
Treasury Wine Estates Ltd (ASX: TWE) are trading at around $5.55 per share, but could be set to rise significantly over the next 12 months.
A recent target from Morgans suggests this could hit $7.30 in the next year.
From current levels, this indicates over 31% upside.
This means a $10,000 investment could grow to approximately $13,153 if it met this target.
