Daily ShareChat: Woolworths

By Jenny Ruth

Woolworths, which owns the Woolworths, Countdown and Foodtown supermarkets and Dick Smiths chains in New Zealand, produced a respectable but not outstanding second quarter sales result, says Tony Sherlock at Aegis Equities Research.

The company's second quarter sales rose 4.1% to $A13.9 billion ($NZ17.5 billion) with New Zealand supermarkets sales up 4.1% in New Zealand dollars but down 2.2% in Australian dollars.

Sherlock says he had expected the Australian Food and Liquor division's sales to be up 6.5% but they rose only 5.9%, down from the 7.1% increase recorded in the first quarter.

Nevertheless, he still favours the stock: "We believe economic conditions in Australia and New Zealand have continued to improve, reinforcing our positive view on the stock."

He considers the company's retail format to be superior and that new 2010 store formats currently being implemented will help deliver above-average earnings per share growth.

"The company is very well managed, has a very robust balance sheet and strong competitive position." While it trades at a high forward price-to-earnings multiple, earnings per share growth is strong and the company has very little debt, Sherlock says.

The company's guidance for net profit for the year ending June is growth between 8% and 11%.

BROKER CALL:  Aegis Equities Research rate Woolworths as add.

Daily ShareChat articles report how the main experts in the market might view a certain share and we provide this commentary as a useful resource for investors. Content on this site does not in any way constitute a recommendation to buy, hold or sell any particular share. Investors should always seek professional advice before making any investment decisions.

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.

Printable version

Related News

WSI first-half profit sinks 41%
Auckland Airport flags higher passenger numbers
Electricity industry stalwart, Barrie Leay, dies suddenly
NZ card spending creeps up 3.5 percent in January
NZ Treasury flags heightened risk from European debt crisis
NZ Dollar Outlook: Kiwi to trade at elevated levels
BNZ keeps interest margins "broadly stable"
Kirkcaldie buyer yet to make firm offer
NZ s resource management system "encourages delay"
NZ 4Q wage inflation speeds up in private sector