Why Goldman Sachs expects Woolworths shares to leap 21%, plus dividends!

Woolworths Group Ltd (ASX: WOW) shares are pushing higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) supermarket giant closed yesterday trading for $30.46. In afternoon trade on Tuesday, shares are changing hands for $30.55 each, up 0.3%.

For some context, the ASX 200 is down 0.6% at this same time.

Taking a step back, Woolworths shares are up a slender 1.3% over the past 12 months. Though that doesn’t include the 84 cents a share in fully-franked dividends Woolies paid to eligible stockholders over this time.

Woolworths stock currently trades on a fully-franked trailing dividend yield of 2.8%.

Why have Woolworths shares underperformed over the full year?

Shares in the supermarket giant have yet to fully recover from the steep falls that followed on the release of the company’s FY 2025 results on 27 August.

Indeed, the stock remains down 8.5% since market close on 26 August, the day prior to the results release.

Woolworths shares plunged 14.7% on 27 August and continued to slide from there through to mid-October.

Investors were overheating their sell buttons after the company reported a 12.6% year-on-year fall in earnings before interest and tax (EBIT) to $2.75 billion. And FY 2025 net profit after tax (NPAT) of $1.39 billion was down 17.1% from FY 2024.

Why Goldman Sachs is bullish on Woolworths stock

After plumbing a five-year closing low of $25.91 a share on 14 October, shares in the ASX 200 supermarket have been on the rebound, now up 17.9% from those lows.

Woolworths CEO Amanda Bardwell foreshadowed that improving performance following the release of the company’s FY 2025 results.

“After a highly disrupted first half, we have taken action to reposition the group for long-term sustainable growth,” Bardwell said at the time.

Bardwell added:

We have seen some early positive signs with improving customer scores… Most important was getting it right for our customers.

We have invested in lowering shelf prices, increasing specials and absorbing cost price increases on everyday items and made our pricing clearer and easier to understand.

And Goldman Sachs believes the past three months’ rebound in Woolies’ stock is far from finished (courtesy of The Bull).

The broker recently initiated coverage on the supermarket giant with a buy rating, noting that the Aussie Supermarket segment more broadly is approaching a “turning point” amid improving product and shelf availability.

Goldman Sachs analyst Peter Marks has a $37 price target on Woolworths shares. That represents a potential upside of 21.1% from current levels. And it doesn’t include those upcoming dividends.

The post Why Goldman Sachs expects Woolworths shares to leap 21%, plus dividends! appeared first on The Motley Fool Australia.

More reading

• 5 excellent ASX dividend stocks I would buy in 2026
• How to build your first ASX share portfolio step by step
• 5 reasons to buy Woolworths shares in 2026
• Where to invest $10,000 in ASX 200 shares this month
• DIY investors: How to build a stable income portfolio starting with $50,000

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.