Why the Woolworths (ASX: WOW) share price has underperformed the ASX 200 in the last year

How does the Aussie conglomerate compare to its ASX 200 peers?
The post Why the Woolworths (ASX: WOW) share price has underperformed the ASX 200 in the last year appeared first on The Motley Fool Australia. –

The Woolworths Group Ltd (ASX: WOW) share price has climbed 18.0% in the last 12 months. That’s a solid growth number, but shares in the Aussie conglomerate actually lag the S&P/ASX 200 Index (ASX: XJO) over this period.

The benchmark Aussie index is up 23.2% in the last year after closing at 7,562.60 points

Why is the Woolworths share price underperforming the ASX 200?

It’s worth taking a look at which industries Woolworths actually operates in. According to the group’s half-year results, Woolworths has segments comprising Australian Food, New Zealand Food, Big W, Endeavour Drinks (since spun-off) and Hotels.

That means there are multiple industry factors that could explain recent Woolworths share price performance.

The coronavirus pandemic has been a major factor disrupting markets in recent months. On-again, off-again lockdowns have hit business earnings and caused share price slumps in various sectors.

Lockdowns are clearly not good for venue-based hospitality. Fewer people are able to leave their homes to spend in these venues. However, alcoholic drinks retailers and supermarkets can often benefit from a spike in sales as lockdowns kick in.

That leaves the Woolworths share price subject to opposing forces impacting valuations. Meanwhile, ASX 200 shares have been pulled higher with particularly strong gains in the technology and mining sectors.

Those are notably two sectors that Woolworths doesn’t have operations in. That means the Woolworths share price has lagged behind the broader ASX 200 index which has been propelled by the likes of Afterpay Ltd (ASX: APT) and BHP Group Ltd (ASX: BHP).

Then there’s the recent Endeavour Group Ltd (ASX: EDV) spin-off. Endeavour completed its initial public offering (IPO) on 24 June 2021 and has gained steadily in the weeks since.

Foolish takeaway

The Woolworths share price has seen some strong gains in the past 12 months. However, the ASX 200 share still lags the benchmark index with tech and mining gains propelling the broader market higher.

The post Why the Woolworths (ASX: WOW) share price has underperformed the ASX 200 in the last year appeared first on The Motley Fool Australia.

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More reading

Woolworths (ASX:WOW) share price struggles after online order outage
ASX 200 Weekly Wrap: Blockbuster Afterpay deal turbocharges ASX to new record highs

Woolworths (ASX:WOW) share price rises as it launches new homewares range
Woolworths (ASX:WOW) share price unhurt by call for COVID bouncers
Woolworths (ASX:WOW) share price up as stores converted to online hubs

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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