Last Update 25 Jan 26

Fair value Decreased 5.58%

EDV: Promotion Trends And Recent Upgrade Will Shape Future Shareholder Appeal

Analysts have trimmed their fair value estimate for Endeavour Group to A$3.87 from A$4.10, reflecting slightly lower profit margin assumptions, even as they factor in modestly higher revenue growth and a small uplift in the future P/E multiple following recent upgrade-driven research.

Analyst Commentary

Recent research points to a more constructive stance on Endeavour Group, with bullish analysts lifting their price targets and assigning a higher P/E multiple, even as they acknowledge near term headwinds from promotion led margin pressure.

Bullish Takeaways

Bullish analysts view the recent promotion led trading update as already reflected in expectations. They see this as reducing the risk of further near term earnings resets under stable trading conditions.
The higher fair value and price targets, clustered around A$4.00 to A$4.10, signal confidence that current valuation already factors in softer margins while leaving room for upside if execution on cost and mix is solid.
The willingness to assign a slightly higher future P/E multiple suggests some optimism that the business can sustain its earnings profile once promotional intensity normalises.
Research characterising the latest downgrade as "somewhat expected" indicates that, in their view, the update clarified the earnings base rather than introducing a new negative thesis.

Bearish Takeaways

Bearish analysts remain cautious that any further deterioration in trading conditions, such as weaker consumer spend or heavier discounting, could trigger additional earnings and valuation pressure.
The reliance on promotions to support sales raises questions about the durability of profit margins if the competitive environment stays intense for longer than currently assumed.
There is ongoing execution risk if the company needs more investment in stores, digital or service. This could weigh on earnings and limit the scope for higher multiples.
The fact that recent upgrades still come shortly after a downgrade highlights that the earnings profile is not yet on a firmly stable footing in the eyes of more cautious voices.

Valuation Changes

Fair Value: trimmed from A$4.10 to about A$3.87, a small reduction in the assessed worth per share.
Discount Rate: nudged higher from roughly 7.79% to about 7.83%, indicating a slightly higher required return in the model.
Revenue Growth: adjusted marginally higher from about 2.75% to roughly 2.76%, implying a very small uplift in expected top line growth assumptions.
Net Profit Margin: reduced from around 3.94% to roughly 3.70%, reflecting a modestly lower earnings margin assumption.
Future P/E: moved from about 18.0x to roughly 18.1x, a slight increase in the multiple applied to future earnings.

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Key Takeaways

Volume growth from renewed hotels and digital expansion positions the company for sustained sales, margin, and profitability improvement as consumer confidence returns.
Ongoing efficiency programs and urban hospitality trends support enhanced operating margins and long-term cash flow resilience.
Structural market decline, rising cost pressures, intense competition, and regulatory risks threaten Endeavour's ability to grow earnings and preserve margins across core business segments.

Catalysts

About Endeavour Group

Engages in the retail drinks and hospitality businesses in Australia.What are the underlying business or industry changes driving this perspective?

As inflation moderates and real wages rise in Australia, consumer spending on hospitality and premium alcoholic beverages is expected to rebound, supporting a return to retail sales growth and improved earnings over the medium term.
The company's ongoing investment in hotel renewals, gaming fleet upgrades, and food & beverage enhancements is driving higher guest engagement and transaction volumes; historical data shows these renewals deliver sales growth well above the network average, providing a catalyst for EBIT and margin expansion.
Rapid growth in online and omnichannel sales, especially among millennials and Gen Z, leverages broader shifts in consumer habits towards digital and convenience-driven retailing, which will increase market reach and support higher revenue and profitability.
Increasing urbanization and higher inner-city density are expanding the opportunity for on-premise consumption across Endeavour's large hotel portfolio, tapping into secular trends of socialization and experiential spending, which is supportive for long-term sales and margins.
Cost optimization initiatives, including the endeavourGO and One Endeavour programs, are delivering sustained improvements to operating efficiency, lowering the cost base and supporting higher net margins and cash flows as these programs scale and automation increases.

Endeavour Group Earnings and Revenue Growth

Endeavour Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Endeavour Group's revenue will grow by 2.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 3.5% today to 4.1% in 3 years time.
Analysts expect earnings to reach A$542.7 million (and earnings per share of A$0.3) by about September 2028, up from A$426.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.4x on those 2028 earnings, up from 15.6x today. This future PE is lower than the current PE for the AU Consumer Retailing industry at 26.2x.
Analysts expect the number of shares outstanding to grow by 0.36% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.62%, as per the Simply Wall St company report.

Endeavour Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Subdued consumer spending and evidence of structural market decline in retail liquor-especially noted by management as "cost of living pressure" and a lagging recovery relative to general retail-suggests secular, not just cyclical, headwinds that may constrain top-line revenue growth in Endeavour's core retail segment.
Ongoing increases in wage inflation (4.25% award wage increases) and staffing costs, partially offset by cost programs, are imposing sustained margin pressure, and management's heavy reliance on continual cost-outs could become less effective over time, impacting future EBIT and net margins.
Persistent competitive intensity-marked by more aggressive pricing, promotions, and new entrants (such as online-only and discount channels)-is driving greater price competition in both online and physical channels, risking margin compression and weaker retail earnings even if volumes recover.
Regulatory, compliance, and public policy risks remain elevated-particularly in gambling/gaming and liquor-where any tightening of laws (e.g., trading hours, advertising restrictions, or licensing) could disproportionately diminish high-margin revenues in hotels and gaming segments, as well as escalate operating costs.
Questions about Endeavour's capacity for meaningful retail EBIT growth surfaced in analyst discussions, with management unable to provide medium-term clarity about cost burdens (especially relating to the One Endeavour technology separation), raising investor concerns that the retail business may struggle to grow earnings in the coming years, putting long-term profitability at risk.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of A$4.428 for Endeavour Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$6.1, and the most bearish reporting a price target of just A$3.6.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$13.1 billion, earnings will come to A$542.7 million, and it would be trading on a PE ratio of 18.4x, assuming you use a discount rate of 7.6%.
Given the current share price of A$3.7, the analyst price target of A$4.43 is 16.4% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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