Wesfarmers Ltd

WES: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$99.30	Rxz	Gxmpntnx

Wesfarmers Earnings: All Eyes on Lithium Sales to Propel Earnings Growth

Johannes Faul

Aug 29, 2024

Wide-moat Wesfarmers’ largest businesses had a surprisingly soft start to the new financial year. We now expect only low mid-single-digit EPS growth in fiscal 2025. But the real story is upcoming lithium sales. We continue to forecast the Covalent lithium project to spark solid EPS growth over the medium term, with first hydroxide sales expected from fiscal 2026. Our EPS CAGR estimate of 9% for the five years to fiscal 2029 compares with a CAGR of 6% for the five years to fiscal 2024. We lift our fair value estimate by 3% to AUD 44.50. The time value of money impact more than offsets the immaterial impact of our softer near-term outlook.

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