The two blue-chip companies listed under the consumer discretionary sector on the Australian Securities Exchange present neck to neck competition in the supermarket landscape.
Wesfarmers Limited (ASX: WES) and Woolworths Group Limited (ASX: WOW) both are major supermarket players in Australia, actively competiNG through the delivery of innovative and wallet-friendly products and services to consumers.
Lets’ have a look at the individual performance of both the companies:
Wesfarmers Limited (ASX: WES)
Wesfarmers Limited puts across a diversified portfolio of business with operations in supermarket, hotels, liquor, and convenience store segments. The company has also penetrated in the Industrial market and has built a strong track record in mining and chemical processing business.
During the half year ended 31 December 2018, Wesfarmers reported a net profit after tax (NPAT) of $4.54 billion including gains on the demerger of Coles and disposals of Kmart Tyre and Auto Service (KTAS), Bengalla, and Quadrant Energy.
The Group also managed to achieve the earnings growth at Bunnings New Zealand and Australia despite subdued trading conditions and high levels of growth in the prior corresponding period. This translates a total store growth of 5.5% and store-on-store sales up 4.0% in 1HFY19 with continued growth in consumer and commercial, in all product categories and across all major trading regions.
On Australian Securities Exchange, the company looks attractive as the stock has returned 20.37% yield in the period of 12 months, incorporating the positive price momentum of 10.48% recorded in the past three months. The stock closed at $34.720, marginally down by 0.6% on 29 March 2019. Its Price to Earnings multiple sits at 7.150x with a market capitalisation of $39.59 billion. The stock has offered decent YTD return of 13.92% till date to its investors.
Woolworths Group Limited (ASX: WOW)
Woolworths Group Limited is a retail company which manages some of Australia’s most trusted brands like Caltex Woolworths (Petrol), Countdown (New Zealand Food), Woolworths supermarket, and endeavor drink brands. The company’s geographical segment includes Australasia, South Africa and Rest of Africa.
For the half year ended 31 December 2018, the Group achieved a 2.3% increase in revenue to $30.6 billion in comparison to 1HFY18. Its Net Profit After Tax from continuing operations grew 2.1% to $920 million in 1HFY19, compared to the previous corresponding period.
During the period, the Group has successfully elevated the customer digital experience across Home Delivery and Pick up through Woolies X. Woolworths owns a portfolio of Big W and hotel brand ALH Group. Big W achieved an improved sales performance, reporting comparable sales growth of 3.8% in the first half of Fiscal 2019, mainly driven by online and lower margin categories such as Toys and Leisure. But its Hotels’ sales growth got sluggish as bars, and gaming sales growth was lower.
WOW closed 0.26% down at $30.400 on 28 March 2019. Though volatile, but the stock has offered a decent return of 14.80% over last one year. The stock is trading at a Price to earnings multiple of 23.020x with a market capitalisation of 40.15 billion.
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