Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

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Equity Bottom-Up

&nbsp;Woolworths' first quarter fiscal 2016 sales were slightly below our expectations, but underlying net profit after tax, or NPAT, guidance for the first half, of AUD 0.9 to AUD 1.0 billion, was significantly below both our and consensus estimates.We have lowered our fiscal 2016 NPAT forecast by 21% to AUD 1.9 billion, but our longterm assumptions remain unchanged and we maintain our AUD 33.00 per share fair value estimate. Shares in Woolworths remain materially undervalued relative to our fair value estimate.Woolworths continues to aggressively cut retail prices within its Australian food and liquor division in an attempt to re-engage with customers, reignite sales growth and defend market share. However, revenue growth will take time to respond and profits are likely to be impacted in the interim.This tough medicine should arguably have been taken a couple of years ago but at least management is taking the necessary steps now to improve the long-term prospects of the company. Woolworths has a high degree of operating leverage, meaning revenue movements are amplified at an NPAT level. As such, the reinvestment drive may be a curse at the moment but is likely be a blessing in the long term.&nbsp;Analysts:&nbsp;Gareth James &amp;&nbsp;Peter Warnes

&nbsp;Woolworths' first quarter fiscal 2016 sales were slightly below our expectations, but underlying net profit after tax, or NPAT, guidance for the first half, of AUD 0.9 to AUD 1.0 billion, was significantly below both our and consensus estimates.We have lowered our fiscal 2016 NPAT forecast by 21% to AUD 1.9 billion, but our longterm assumptions remain unchanged and we maintain our AUD 33.00 per share fair value estimate. Shares in Woolworths remain materially undervalued relative to our fair value estimate.Woolworths continues to aggressively cut retail prices within its Australian food and liquor division in an attempt to re-engage with customers, reignite sales growth and defend market share. However, revenue growth will take time to respond and profits are likely to be impacted in the interim.This tough medicine should arguably have been taken a couple of years ago but at least management is taking the necessary steps now to improve the long-term prospects of the company. Woolworths has a high degree of operating leverage, meaning revenue movements are amplified at an NPAT level. As such, the reinvestment drive may be a curse at the moment but is likely be a blessing in the long term.&nbsp;Analysts:&nbsp;Gareth James &amp;&nbsp;Peter Warnes

Woolworths' Much Needed Medicine Leaves a Sour Taste

Woolworths Ltd

Woolworths' Much Needed Medicine Leaves a Sour Taste