WOW share price in focus
Founded in 1924, Woolworths is a retail operator in Australia and New Zealand with over 3,000 stores and over 100,000 employees. It is one of Australia’s largest companies in terms of revenue and market share.
Woolworths’ main operations include supermarkets (under the Woolworths brand in Australia and Countdown in New Zealand), retailing through its discount department stores under the Big W brand, and business-to-business (B2B) brands like PFD. However, its 35%+ market share of Australian groceries is undoubtedly its crown jewel.
Woolworths is a very popular choice for many ASX investors seeking dividend income. Historically, it has consistently paid a fully franked dividend, usually at a yield of over 3%, and offers a very defensive earnings stream with most revenue coming from consumer staples. Its competitive advantage is best summarised as scale (distribution, low costs, etc.) and proximity (most shoppers still shop based on distance to the supermarket).
CAR shares
Founded in 1997, Carsales.com is an online marketplace that specialises in car, motorbike, and boat advertisements in Australia.
As a marketplace provider, Carsales.com aims to simplify and improve the buying and selling process for both parties. Large online transactions are also safer than cash-based transactions as funds can be held in escrow and only released when both parties are satisfied with the transaction.
The company has grown to now have over 600 employees and serves various countries outside of Australia, many of which are in South America and Southeast Asia.
WOW share price valuation
One way to have a ‘quick read’ of where the WOW share price is could be to study something like dividend yield through time. Remember, the dividend yield is effectively the ‘cash flow’ to a shareholder, but it can fluctuate year-to-year or between payments. Currently, Woolworths Group Ltd shares have a dividend yield of around 4.34%, compared to its 5-year average of 2.92%. Put simply, WOW shares are trading above their historical average dividend yield. Be careful how you interpret this information though – it could mean that dividends are growing, or it could mean the share price is falling, or both. In the case of WOW, last year’s dividend was greater than the 3-year average, so the dividend has been growing.
Since CAR is more of a growth company than an established blue chip, a price-sales ratio might be a more appropriate assessment. The CAR share price currently trades at a price-sales ratio of 12.92x, which compares to its 5-year long-term average of 14.28x. So, CAR shares are trading below their historical average. However, a simple multiple like this should only be the start of your research. The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! Just remember there are many different ways to value a share, like CAR Group Limited.
