Woolworths Group Ltd (ASX: WOW) shares have slumped into the red in Tuesday afternoon trade.
At the time of writing, the supermarket giant's shares are down around 0.5% and are changing hands at $38.42 a piece.
The shares have come off the boil recently after reaching an all-time high of $40.66 in early-August.
Since then the ASX consumer discretionary shares have slipped around 6%.
But the latest decline has barely made a dent in the amount of gains Woolworths shares have enjoyed over the past year.
For the year-to-date, the shares are up around 31%, and they're 18% higher than 12 months ago.
What's driven the Woolworths share price rally this year?
It hasn't been smooth sailing for the Woolworths share price over the past 12 months, and some volatility continued throughout early 2026. But the shares have climbed higher overall.
The business caught headlines earlier this year after it posted its third-quarter sales update in April where it revealed a 4.5% increase in sales.
At the time, the company also said underlying trading momentum remained solid, but management noted they have seen "some signs of increased customer caution". Investors were spooked and quickly offloaded their shares.
Woolworths shares also gained attention in June following media reports about the company's plans to offshore hundreds of corporate roles. The move is part of a $400 million office cost reduction push to simplify operations and reduce costs.
Since hitting a low in mid-May, Woolworths shares have now risen around 18%.
It looks like the increase was mostly driven by investor confidence that the turnaround is coming to fruition. There is renewed investor confidence that the retailer's earnings are recovering after a difficult period in late-2025.
Woolworths posted a stronger-than-expected first half profit result in February and continues to actively pursue cost cutting initiatives to help support margins and earnings over time.
The company is due to announce its FY26 results tomorrow.
Are the supermarket shares a buy, sell or hold now?
Market experts appear to be reserved about the outlook for Woolworths shares ahead of the company's results announcement.
TradingView data shows the majority of analysts (eight out of 17) have a hold rating on Woolworths shares. Another three rate the shares as a buy/strong buy and six rate the shares as a sell/strong sell.
Although, after a strong rally, it looks like the shares are now trading above fair value.
The average $37.39 target price implies a potential 3% downside, at the time of writing.
Although some forecast that the shares could drop 10% to $34.60 over the next 12 months. Meanwhile, others think Woolworths shares have the potential to climb 6% higher to $40.90 a piece, at the time of writing.
UBS downgraded Woolworths shares to a sell rating earlier this month, but raised its 12-month price target to $39.
The post Are Woolworths shares a buy, sell or hold ahead of its FY26 results announcement? appeared first on The Motley Fool Australia.
Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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