Is now the time to load up on Woodside shares?

The Woodside Energy Group Ltd (ASX: WDS) share price has been a great performer since the start of 2022. It’s up by more than 60%.

It has gone on a great run, but the question is whether the business will be able to keep it going or if this is as good as it’s going to be.

Energy prices push Woodside share price higher

Woodside has benefited from the demand for energy over the past year. There was stronger demand for resources like LNG. The ability of the world to create enough green energy is still a while away, though Woodside is playing its part in that objective.

The latest update from a business is usually the one that investors give the most meaning to.

In the company’s fourth quarter, the three months to 31 December 2022, it said its production was up 0.7% from the third quarter of 2022 to 51.6 million barrels of oil equivalent (MMboe).

It reported that it achieved a portfolio average realised price of $98 per barrel of oil equivalent.

This update meant that Woodside achieved full-year production of 157.7 MMboe, which beat the production guidance of 153 MMboe to 157 MMboe because of “strong operational performance in the fourth quarter”.

It also said that it continues to make progress with its projects of Scarborough, Pluto train 2 and Sangomar.

Is it still a good buy?

For shareholders that have owned shares for a while, they’ve had a great 13 months.

The company’s 2023 production guidance for 2023 is 180 MMboe to 190 MMboe, partly thanks to the acquisition of the BHP Group Ltd (ASX: BHP) oil and gas division.

According to Commsec, Woodside shares are valued at close to 9 times FY23’s estimated earnings with a potential grossed-up dividend yield of 10.6%.

However, the projections also show Woodside’s earnings per share (EPS) dropping by around 15% in FY24 and then falling another approximately 15% in FY25.

So, the question is – How long will the energy price stay elevated? Long-term good prices should enable the business to keep earning big profits and paying large dividends.

The analyst recommendations that Commsec covers still seem quite positive about the business, with nine buy ratings, seven hold ratings and four sell ratings. One of the recommendations covered by Commsec is Goldman Sachs’ buy rating, with a price target of $38.50.

For me, if I were wanting to try to generate outperformance, I’d want to buy low, sell high with this resource share. The Woodside share price has jumped higher, so I think it’d be worthwhile to be patient and wait for a lower price.

The post Is now the time to load up on Woodside shares? appeared first on The Motley Fool Australia.

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• Woodside share price rises on record FY22 production and revenue
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Motley Fool contributor Tristan Harrison 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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