WOW -Woolies

 WOW

07/07/26

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Over the last 5 years, Woolworths Group Ltd (ASX: WOW) has navigated immense pandemic and post-pandemic volatility. The supermarket giant's 5-year trend reflects strong equity returns early on, followed by compressed margins, supply chain disruptions, and shifting consumer trends. [1, 2, 3, 4]

Financial Performance Breakdown:

• Profit & Revenue: Revenue has grown steadily, sitting around $70.28 billion for the trailing twelve months. However, profits have been volatile. The group recorded net profit drops in recent periods due to supply chain industrial actions, competitive discounting, and a softer retail environment. [1, 2, 3]

Profit is all over the place! Hard to understand from a business that has such a dominant market position.  Still, revenues are growing.

• Return on Equity (ROE): Highly volatile. Over the past 5 years, ROE averaged over 23%, but experienced violent swings. It peaked at an incredible 42.0% in June 2022 before dropping to a low of 1.8% in 2024, and recovering to around 12% in the most recent periods. [1, 2, 3]

It's unpredictability makes it hard to predict future earnings. Govt inquiries over prices & cost of living increases make it a difficult business to run at the best of times. They have pricing power and any hint that they are abusing that power will land them into trouble with the ACCC.

• Debt & Leverage: The balance sheet shows a high debt-to-equity ratio (over 360% based on statutory metrics). However, analysts view this as somewhat inflated due to capitalised lease liabilities (standard accounting for large retailers under IFRS 16). More crucially, interest coverage has tightened, and liquidity remains somewhat stretched, which is typical for grocery models. [1, 2]

Recent Market Momentum:
Despite the operational margin strain, the WOW share price has enjoyed strong outperformance, surging over 33% year-to-date(July 2026). Investors continue to value the company for its core supermarket earnings and defensive nature. [1, 2, 3, 4]

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The current trailing Price-to-Earnings (P/E) ratio for Woolworths Group Limited (ASX: WOW) is approximately 80.3 to 81.6. This elevated level reflects a sharp drop in statutory earnings per share (EPS to $0.49) relative to its resilient share price trading around $39.50. [1, 2, 3, 4]

Historical P/E Ratio Breakdown (Last 10 Years)

Woolworths' historical P/E has been highly volatile due to major corporate restructures, asset write-downs (such as Masters Home Improvement and Big W), and the 2021 demerger of its drinks and hospitality arm, Endeavour Group. [1]

The structural trend over the last decade shows normalized levels generally hovering between 20x and 30x earnings, punctuated by extreme spikes when one-off statutory accounting losses depressed net profits. [1, 2]

Year [1, 2, 3, 4, 5]	Approximate P/E Ratio	Key Driver / Context
Current (Mid-2026)	80.3x – 81.6x	High multiple caused by compressed statutory EPS of ~$0.49.
2025	27.6x – 41.6x	Market adjustments post-inflationary pressures on grocery margins.
2024	379.0x (Spike)	Massive statutory profit drop due to non-cash write-downs (e.g., NZ food business).
2023	29.2x	Strong post-COVID consumer demand stabilization.
2022	5.1x (Drop)	Artificial distortion from massive accounting gains from the Endeavour Group spin-off.
2021	32.4x	Elevated valuation multiples driven by COVID-era panic buying and elevated sales.
2020	28.1x	Early pandemic lockdowns pushed significant volumes into supermarkets.
2019	24.5x	Business turnaround taking shape under structural optimization strategies.
2018	22.8x	Return to normal operations following the expensive exit from hardware retail.
2017	21.0x	Restructuring phase; core supermarket operations beginning to recover.
2016	Negative / N/A	Statutory net loss recorded due to multi-billion dollar Masters hardware exit write-offs.

Crucial Financial Context for Investors

• Statutory vs. Underlying Earnings: Woolworths regularly incurs large one-off impairments. When evaluating WOW on platforms like Yahoo Finance or Market Index, the trailing statutory P/E can look alarmingly high (e.g., 81x). [1]
• Forward Valuation: Institutional analysts focus on forward-looking expectations. The forward P/E ratio sits at roughly 26.9x to 28.9x, indicating that the market expects underlying earnings to normalize quickly through late 2026 and 2027. [1, 2, 3]
• Industry Peer Comparison: At its current underlying multiple (~27x), Woolworths trades at a premium relative to global supermarket peers like Tesco (~16x), but remains in line with domestic rival Coles Group (ASX: COL), which historical averages price around 25x–30x. [1, 2, 3]

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