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Wesfarmers Ltd WES

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Stock XASX Rating as of
A$69.03 +0.05 (0.07%)
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As of Delayed Price Closed

Company Report

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

Johannes Faul

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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Price vs Fair Value

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WES is trading at a 370% premium.
Price
A$69.03
Fair Value
A$75.20
Uncertainty
Medium
1-Star Price
A$81.18
5-Star Price
A$87.62
Economic Moat
Kfwyd
Capital Allocation
Lmpjszzx

Bulls Say, Bears Say

Bulls

The Bunnings is the undisputed leader in Australian home improvement retailing. Based on its market position, Bunnings could start giving up some volume growth and improve profitability by increasing prices.

Bears

Wesfarmers' retailing businesses are pro-cyclical and the near-term outlook for the Australian economy and consumer spending is mixed at best.

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News

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Trading Information

Previous Close Price
A$68.98
Day Range
A$68.71–69.32
52-Week Range
A$49.57–77.20
Bid/Ask
A$69.00 / A$69.30
Market Cap
A$78.33 Bil
Volume/Avg
1.0 Mil / 1.4 Mil

Key Statistics

Price/Earnings (Normalized)
29.73
Price/Sales
1.78
Dividend Yield (Trailing)
2.87%
Dividend Yield (Forward)
2.87%
Total Yield
2.87%

Company Profile

Wesfarmers is Australia's largest conglomerate. Its retail operations include the Bunnings hardware chain (number one in market share), discount department stores Kmart and Target (number one and three) and Officeworks in office supplies (number one). These activities account for the vast majority of group earnings before taxes. Other operations include chemicals, fertilizers, industrial and medical gases, LPG production and distribution, and industrial and safety supplies. Management is focused on generating cash and creating shareholder wealth in the long term.
Sector
Consumer Cyclical
Industry
Home Improvement Retail
Stock Style Box
Large Core
Total Number of Employees
217,000
Website
https://www.wesfarmers.com.au

Competitors

Valuation

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Metric
WES
SUL
HD
Price/Earnings (Normalized)
 29.7316.9427.47
Price/Book Value
 9.123.0092.39
Price/Sales
 1.781.072.69
Price/Cash Flow
 17.027.1721.88
Price/Earnings
WES
SUL
HD

Financial Strength

Metric
WES
SUL
HD
Quick Ratio
 0.370.270.25
Current Ratio
 1.141.201.15
Interest Coverage
 9.856.7410.28
Quick Ratio
WES
SUL
HD

Profitability

Metric
WES
SUL
HD
Return on Assets (Normalized)
 9.45%7.45%18.62%
Return on Equity (Normalized)
 30.34%17.78%749.70%
Return on Invested Capital (Normalized)
 14.33%11.37%29.73%
Return on Assets
WES
SUL
HD

Home Improvement Retail Industry Comparables

Screen With Investor
1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
The Home Depot Inc
HD
GzwzhfdqTkd$408.5 Bil
 Lowe's Companies Inc
LOW
LfpnpzqqpQbk$154.2 Bil
 Wesfarmers Ltd ADR
WFAFY
—Qxxz$53.8 Bil
 Wesfarmers Ltd
WFAFF
—Tbjj$53.8 Bil
 Floor & Decor Holdings Inc Class A
FND
—Czkhk$12.9 Bil
 Kingfisher PLC
KGFHF
—Sxfb$7.5 Bil
 Kingfisher PLC ADR
KGFHY
WcgwrdljJql$7.5 Bil
 Mr D.I.Y. Group (M) Bhd
MDIYF
—Kykhhk$4.7 Bil
 Home Product Center PCL Shs Foreign registered
HPCRF
—Kzpydj$4.3 Bil
 Arhaus Inc Class A
ARHS
—Nbzg$1.5 Bil

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