Shareholders might have noticed that Woolworths Group Limited (ASX:WOW) filed its interim result this time last week. The early response was not positive, with shares down 5.6% to AU$33.50 in the past week. It was a credible result overall, with revenues of AU$35b and statutory earnings per share of AU$1.32 both in line with analyst estimates, showing that Woolworths Group is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Woolworths Group  earnings-and-revenue-growth

Taking into account the latest results, the most recent consensus for Woolworths Group from 14 analysts is for revenues of AU$67.4b in 2024. If met, it would imply a modest 2.4% increase on its revenue over the past 12 months. Woolworths Group is also expected to turn profitable, with statutory earnings of AU$0.23 per share. Before this earnings report, the analysts had been forecasting revenues of AU$68.0b and earnings per share (EPS) of AU$0.27 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at AU$36.54, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Woolworths Group analyst has a price target of AU$42.00 per share, while the most pessimistic values it at AU$27.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.



Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Woolworths Group's growth to accelerate, with the forecast 5.0% annualised growth to the end of 2024 ranking favourably alongside historical growth of 2.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.5% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Woolworths Group to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Woolworths Group going out to 2026, and you can see them free on our platform here..

Even so, be aware that  Woolworths Group is showing  2 warning signs in our investment analysis, and 1 of those makes us a bit uncomfortable...

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.