We need to talk about Woolworths

The iconic Australian business may look cheap, but it faces numerous challenges.

Summary: Woolworths (WOW) has been receiving much attention of late. Both it and Coles recently held investor strategy days and Lowe's (Woolworth's joint-venture partner in Home improvement) reported earnings suggesting that the Masters franchise continues to struggle. As a result, we have taken the opportunity to make some observations on WOW’s investment case.

Key take-out: While arguably screening as cheap, it appears that a number of risks and uncertainties exist for Woolworths and, in our view, the current share price does not provide a sufficient margin for error to warrant investing.


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