WES Will Deliver Higher Margins And Stronger Earnings Durability Ahead

Analysts have modestly raised their price target on Wesfarmers by aligning valuation with slightly stronger expected revenue growth, improved profit margins, and a lower forward P/E multiple, while largely maintaining the prior fair value view of the business.

Analyst Commentary

Bullish analysts have highlighted that Wesfarmers' improved revenue trajectory and disciplined cost management justify a modest uplift to valuation metrics, while remaining broadly aligned with prior fair value assessments.

Recent commentary points to a more constructive outlook on earnings durability, with analysts flagging upside risk to margins if current efficiency initiatives are sustained and operating leverage continues to build across the portfolio.

While near term macro uncertainty persists, the tone of recent research has shifted incrementally more positive, with several models now incorporating stronger medium term growth in core businesses and a more conservative view on downside scenarios.

Overall, sentiment around execution quality, capital allocation discipline, and Wesfarmers' ability to generate attractive returns through the cycle has underpinned the latest round of supportive price target revisions.

Bullish Takeaways

• Bullish analysts see scope for upside to revenue forecasts as Wesfarmers continues to gain share in key retail categories and benefits from targeted growth investments.
• Improving margin trends and ongoing cost efficiencies are viewed as catalysts for further earnings upgrades, supporting a higher justified valuation multiple over time.
• Stronger balance sheet flexibility and disciplined capital allocation, including selective growth projects and shareholder returns, are cited as reasons for increasing confidence in long term value creation.
• Enhanced visibility on earnings from diversified business segments is leading bullish analysts to narrow downside scenarios, reinforcing a more constructive risk reward profile at current levels.

What's in the News

• Announced a special dividend of AUD 0.40 per share, with an ex-dividend date of November 5, 2025, a record date of November 6, 2025, and a payment date of December 4, 2025 (company announcement)

Valuation Changes

• Fair Value remains unchanged at A$100.00 per share, indicating that the updated assumptions do not alter the core valuation anchor.
• The Discount Rate has risen slightly from 8.08 percent to 8.24 percent, reflecting a modestly higher required return for equity investors.
• Revenue Growth has increased modestly from about 5.59 percent to 6.01 percent, incorporating a slightly stronger medium term sales outlook.
• The Net Profit Margin has risen from roughly 6.59 percent to 7.11 percent, capturing improved operating efficiency and margin resilience in forecasts.
• The Future P/E has fallen from about 40.40 times to 37.16 times, suggesting a lower multiple applied to forward earnings despite more constructive earnings assumptions.