Energy company Santos Limited (AU:STO) and retail giant Woolworths Group (AU:WOW) will report their quarterly earnings on Wednesday, February 22, 2023.
While investors await the next set of earnings from these companies, analysts have rated both stocks as Buys. According to them, Santos has a potential upside in its stock price, while Woolworths is currently trading at a higher price with no further growth predicted.
Let’s have a closer look at these two stocks.
Santos is among the leading oil and gas companies in Asia Pacific and is the biggest gas supplier in Australia.
The company will announce its fourth-quarter and full-year results for 2022 this week. The consensus EPS forecast for Q4 is AU$0.59 per share, which is more than 100% growth over the last year’s EPS of AU$0.29 per share in the same quarter.
Last month, the company reported its fourth-quarter production numbers for 2022. The sales revenue during the period of AU$1.9 billion increased by 23% on a year-over-year basis, driven by higher oil and gas prices. This will push the yearly revenue for 2022 to AU$7.8 billion, which shows a massive 65% growth from the previous year.
The total production during the quarter declined as compared to the third quarter, due to the unplanned maintenance activity at John Brookes’ platform in Western Australia. This will also impact the full-year production numbers of 2022, which will be towards the lower range of guidance of 103-106 mmboe (million barrels of oil).
Are Santos Shares a Good Buy?
Ahead of its earnings, Citigroup analyst James Byrne reiterated his Buy rating on the stock at a target price of AU$8.3. This suggests an upside of 22.5% on the current price.
According to TipRanks’ rating consensus, STO stock has a Strong Buy rating, based on 10 Buy recommendations.
The average target price is AU$9.06, which suggests an upside of 33.6% on the current trading price.
Woolworths Group Limited
Woolworths Group is an Australian retail company that sells groceries, pet and health products, and other items to millions of customers.
The company will release its second-quarter earnings for the fiscal year 2023. Analysts predict an EPS of AU$0.72 per share, much higher than the last year’s figure of AU$0.54 per share in the same quarter.
The sales forecast for Q2 is AU$16.71 billion, up from AU$16.3 billion in the previous quarter. The company has seen some improvement in its sales numbers for Q2, along with some stability in the food business in Australia and New Zealand. However, analysts expect that lower sales and higher costs will impact the earnings of the company in 2023.
In terms of share price growth, analysts don’t see any upside in the short term and have mixed ratings on the stock. But they do feel the company’s long-term position is strongly driven by its loyal customer base and pricing power.
What is the Future of Woolworths Share Price?
The average target price for WOW stock is AU$35.71, which is around 2.8% lower than the current trading price. YTD, the stock has gained almost 11%.
Overall, the stock has a Moderate Buy rating on TipRanks.
Analysts are bullish on the overall numbers in the results and have rated STO a Strong Buy and WOW stock a Moderate Buy.
Despite the slight decline in the production numbers, the higher oil and gas prices should drive up the earnings for Santos. Analysts also see a potential upside in its share price.
On the other hand, Woolworths’ stock has mixed opinions from analysts, but the long-term prospects for the company are bright, given its dominant position in the industry.