WOW share price in focus
Founded in 1924, Woolworths is a leading retail operator in Australia and New Zealand, with over 3,000 stores and more than 100,000 employees. As one of Australia’s largest companies by revenue and market share, Woolworths plays a significant role in the region’s retail sector.
The company’s core operations include supermarkets (operating under the Woolworths brand in Australia and Countdown in New Zealand), discount department stores under the Big W brand, and business-to-business (B2B) services through brands like PFD. However, Woolworths’ dominant 35%+ market share in the Australian grocery sector remains its key strength.
Woolworths is also a popular choice among ASX investors looking for dividend income. It has a strong track record of paying fully franked dividends, typically offering yields over 3%, and its revenue base, largely derived from consumer staples, provides a stable and defensive earnings stream. The company’s competitive edge lies in its scale, enabling efficient distribution and cost control, as well as its proximity to consumers, as many shoppers continue to choose supermarkets based on convenience and location.
FLT shares
Flight Centre is an Australian staple in the travel industry, but you may not know that it operates under multiple names across over 80 countries!
Flight Centre isn’t just limited to booking flights either. They offer services in both the retail and corporate sectors and across sub-sectors including tour operations, travel experiences and hotel management.
Unlike many of the online travel agencies, Flight Centre still has brick-and-mortar locations where customers can come in and have face-to-face consultations. This extra service, as well as the exclusive deals Flight Centre can get access to because of its reach, are what keep customers coming back.
WOW & FLT share price valuation
We would consider WOW to be a ‘mature’ or ‘blue-chip’ business, so some of the metrics that could be worth considering include the debt/equity ratio, average yield, and return on equity, or ROE. These measures give us a sense of the company’s debt levels, their ability to generate returns from their assets, and their ability to consistently return profits to shareholders.
For FY24, Woolworths Group Ltd reported a debt/equity ratio of 300.2%, meaning the company is leveraged (it has more debt than equity). This can increase risk so it’s important that a leveraged company is generating stable returns and has sufficient cash flow to pay interest on its debts.
Over the last 5 years, WOW has delivered an average dividend yield of 2.9% per year. This is important to note if you’re looking for income from your investments.
Finally, in FY24, WOW reported an ROE of 1.9%. For a mature business you generally want to see an ROE of more than 10%, so WOW’s returns are a bit less than what we’d expect.
As more of a growth company, some of the trends we might consider for FLT shares include revenue growth, profit growth, and return on equity (ROE). I say ‘trends’ because it’s always important to look at these figures over a few years. The trend is a much more valuable figure than a single measure at one point in time.
Over the last 3 years, FLT has increased revenue at a rate of 89.8% per year to hit $2,708m in FY24. Meanwhile, net profit has increased from -$433m to $140m. As for ROE, FLT’s last reported figure was 11.9%.
Please keep in mind that context is important. These metrics give us some indication of company performance, but it’s just the start of valuing WOW or FLT shares. To learn more about valuation, check out one of our free online investing courses.
