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Wesfarmers

ASX:WES
Snowflake Description

Adequate balance sheet with moderate growth potential.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
WES
ASX
A$57B
Market Cap
  1. Home
  2. AU
  3. Consumer Retailing
Company description

Wesfarmers Limited engages in the retail, coal mining and production, gas processing and distribution, industrial and safety product distribution, chemicals and fertilizers manufacturing, and investment businesses in Australia, New Zealand, the United Kingdom, and internationally. The last earnings update was 204 days ago. More info.


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WES Share Price and Events
Price Volatility
WES
Industry
5yr Volatility vs Market

Value

 Is Wesfarmers undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Wesfarmers to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.
Raw Data

Below are the data sources, inputs and calculation used to determine the intrinsic value for Wesfarmers.

ASX:WES Discounted Cash Flow Data Sources
Data Point Source Value
Valuation Model 2 Stage Free Cash Flow to Equity
Levered Free Cash Flow Average of 13 Analyst Estimates (S&P Global) See below
Discount Rate (Cost of Equity) See below 8.6%
Perpetual Growth Rate 10-Year AU Government Bond Rate 2.8%

An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for ASX:WES
Data Point Calculation/ Source Result
Risk-Free Rate 10-Year AU Govt Bond Rate 2.8%
Equity Risk Premium S&P Global 7.2%
Consumer Retailing Unlevered Beta Simply Wall St/ S&P Global 0.53
Re-levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
= 0.533 (1 + (1- 30%) (9.59%))
0.568
Levered Beta Levered Beta limited to 0.8 to 2.0
(practical range for a stable firm)
0.8
Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 2.77% + (0.8 * 7.23%)
8.55%

Discounted Cash Flow Calculation for ASX:WES using 2 Stage Free Cash Flow to Equity Model

The calculations below outline how an intrinsic value for Wesfarmers is arrived at by discounting future cash flows to their present value using the 2 stage method. We use analyst's estimates of cash flows going forward 5 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.

ASX:WES DCF 1st Stage: Next 5 year cash flow forecast
2018 2019 2020 2021 2022
Levered FCF (AUD, Millions) 2,617.73 2,594.28 2,714.05 2,788.08 2,903.62
Source Analyst x4 Analyst x4 Analyst x4 Analyst x1 Extrapolated @ (4.14%)
Present Value
Discounted (@ 8.55%)
2,411.43 2,201.50 2,121.64 2,007.75 1,926.17
Present value of next 5 years cash flows A$10,668
ASX:WES DCF 2nd Stage: Terminal Value
Calculation Result
Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)
= A$2,904 × (1 + 2.77%) ÷ (8.55% – 2.77%)
A$51,622
Present Value of Terminal Value = Terminal Value ÷ (1 + r)5
= A$51,622 ÷ (1 + 8.55%)5
A$34,244
ASX:WES Total Equity Value
Calculation Result
Total Equity Value = Present value of next 5 years cash flows + Terminal Value
= A$10,668 + A$34,244
A$44,913
Equity Value per Share
(AUD)
= Total value / Shares Outstanding
= A$44,913 / 1,134
A$39.61
ASX:WES Discount to Share Price
Calculation Result
Value per share (AUD) From above. A$39.61
Current discount Discount to share price of A$49.45
= -1 x (A$49.45 - A$39.61) / A$39.61
-24.8%

Learn more about our DCF calculations in Simply Wall St’s analysis model .

  • The current share price of Wesfarmers is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Wesfarmers's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Wesfarmers's earnings available for a low price, and how does this compare to other companies in the same industry?
Raw Data
ASX:WES PE (Price to Earnings) Ratio Data Sources
Data Point Source Value
Earnings Per Share * Company Filings () in AUD A$1.33
ASX:WES Share Price ** ASX (2018-07-23) in AUD A$49.45
Global Consumer Retailing Industry PE Ratio Median Figure of 289 Publicly-Listed Consumer Retailing Companies 20.63x
Australia Market PE Ratio Median Figure of 625 Publicly-Listed Companies 17.31x

* Trailing twelve months (TTM) annual GAAP earnings per share excluding extraordinary items.

** Primary Listing of Wesfarmers.

ASX:WES PE (Price to Earnings) Ratio Calculation
Calculation Outcome
PE Ratio

= ASX:WES Share Price ÷ EPS (both in AUD)

= 49.45 ÷ 1.33

37.09x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Wesfarmers is overvalued based on earnings compared to the Global Consumer Retailing industry average.
  • Wesfarmers is overvalued based on earnings compared to the Australia market.
Price based on expected Growth
Does Wesfarmers's expected growth come at a high price?
Raw Data
ASX:WES PEG (Price to Earnings to Growth) Ratio Data Sources
Data Point Source Value
PE Ratio See PE Ratio Section 37.09x
Net Income Annual Growth Rate See Future Growth Section.
Line of Best Fit* through Consensus Estimate Earnings of 13 Analysts
23.6%per year
Global Consumer Retailing Industry PEG Ratio Median Figure of 218 Publicly-Listed Consumer Retailing Companies 2.13x
Australia Market PEG Ratio Median Figure of 389 Publicly-Listed Companies 1.42x

*Line of best fit is calculated by linear regression .

ASX:WES PEG (Price to Earnings to Growth) Ratio Calculation
Calculation Outcome
PEG Ratio

= PE Ratio ÷ Net Income Annual Growth Rate

= 37.09x ÷ 23.6%

1.57x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Wesfarmers is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Wesfarmers's assets?
Raw Data
ASX:WES PB (Price to Book) Ratio Data Sources
Data Point Source Value
Book Value per Share Company Filings () in AUD A$20.13
ASX:WES Share Price * ASX (2018-07-23) in AUD A$49.45
Oceania Consumer Retailing Industry PB Ratio Median Figure of 5 Publicly-Listed Consumer Retailing Companies 1.85x
Australia Market PB Ratio Median Figure of 1,794 Publicly-Listed Companies 1.97x
ASX:WES PB (Price to Book) Ratio Calculation
Calculation Outcome
PB Ratio

= ASX:WES Share Price ÷ Book Value per Share (both in AUD)

= 49.45 ÷ 20.13

2.46x

* Primary Listing of Wesfarmers.

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Wesfarmers is overvalued based on assets compared to the Oceania Consumer Retailing industry average.
X
Value checks
We assess Wesfarmers's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Consumer Retailing industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Consumer Retailing industry average (and greater than 0)? (1 check)
  5. Wesfarmers has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.

    Full details on the Value part of the Simply Wall St company analysis model.

Future Performance

 How is Wesfarmers expected to perform in the next 1 to 3 years based on estimates from 13 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
23.6%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Wesfarmers expected to grow at an attractive rate?
  • Wesfarmers's earnings growth is expected to exceed the low risk savings rate of 2.8%.
Growth vs Market Checks
  • Wesfarmers's earnings growth is expected to exceed the Australia market average.
  • Wesfarmers's revenue growth is positive but not above the Australia market average.
Annual Growth Rates Comparison
Raw Data
ASX:WES Future Growth Rates Data Sources
Data Point Source Value (per year)
ASX:WES Future Earnings Growth Rate Line of Best Fit* through Consensus Estimate Earnings of 13 Analysts 23.6%
ASX:WES Future Revenue Growth Rate Line of Best Fit* through Consensus Estimate Revenue of 13 Analysts 2.3%
Global Consumer Retailing Industry Earnings Growth Rate Market Cap Weighted Average 10.1%
Global Consumer Retailing Industry Revenue Growth Rate Market Cap Weighted Average 4.1%
Australia Market Earnings Growth Rate Market Cap Weighted Average 12%
Australia Market Revenue Growth Rate Market Cap Weighted Average 4%

*Line of best fit is calculated by linear regression .

Industry and Market average data is calculated daily.

Learn more about our growth rate calculations in Simply Wall St’s analysis model.

Analysts growth expectations
Raw Data
ASX:WES Analysts Growth Expectations Data Sources
Data Point Source Value
Past Financials Company Filings (6 months ago) See Below
Future Estimates Average of up to 13 Analyst Estimates (S&P Global) See Below
All numbers in AUD Millions and using Trailing twelve months (TTM) annual period rather than quarterly.
ASX:WES Future Estimates Data
Date (Data in AUD Millions) Revenue Cash Flow Net Income * Avg. No. Analysts
2022-06-30 77,459 3,216 2
2021-06-30 74,649 3,084 3
2020-06-30 72,241 4,435 3,070 12
2019-06-30 69,707 4,273 2,950 13
2018-06-30 69,935 3,949 1,450 13
ASX:WES Past Financials Data
Date (Data in AUD Millions) Revenue Cash Flow Net Income *
2017-12-31 69,430 4,475 1,508
2017-09-30 68,937 4,351 2,191
2017-06-30 68,444 4,226 2,873
2017-03-31 67,940 3,918 1,732
2016-12-31 67,436 3,609 591
2016-09-30 66,709 3,487 499
2016-06-30 65,981 3,365 407
2016-03-31 64,960 3,640 1,432
2015-12-31 63,939 3,914 2,457
2015-09-30 63,193 3,853 2,449
2015-06-30 62,447 3,791 2,440
2015-03-31 61,928 2,028

*GAAP earnings excluding extraordinary items.

Super high growth metrics
High Growth Checks
  • Wesfarmers's earnings are expected to grow significantly at over 20% yearly.
  • Wesfarmers's revenue is expected to grow by 2.3% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Raw Data
ASX:WES Past and Future Earnings per Share
Data Point Source Value
Past Financials Company Filings (6 months ago) See Below
Future Estimates Average of up to 13 Analyst Estimates (S&P Global) See Below

All data from Wesfarmers Company Filings, last reported 6 months ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

ASX:WES Future Estimates Data
Date (Data in AUD Millions) EPS * EPS High Estimate EPS Low Estimate Avg. No. Analysts
2022-06-30 2.84 2.84 2.84 1.00
2021-06-30 2.72 2.72 2.72 1.00
2020-06-30 2.69 2.84 2.51 9.00
2019-06-30 2.59 2.76 2.43 11.00
2018-06-30 1.35 2.46 1.05 8.00
ASX:WES Past Financials Data
Date (Data in AUD Millions) EPS *
2017-12-31 1.33
2017-09-30 1.94
2017-06-30 2.55
2017-03-31 1.54
2016-12-31 0.53
2016-09-30 0.44
2016-06-30 0.36
2016-03-31 1.28
2015-12-31 2.19
2015-09-30 2.18
2015-06-30 2.16
2015-03-31 1.80

*GAAP earnings excluding extraordinary items.

Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Wesfarmers is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
X
Future performance checks
We assess Wesfarmers's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the Global market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the Global market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Wesfarmers has a total score of 3/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Wesfarmers performed over the past 5 years?

  • Wesfarmers's last earnings update was 204 days ago.
The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Wesfarmers's growth in the last year to its industry (Consumer Retailing).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Wesfarmers's year on year earnings growth rate was negative over the past 5 years and the most recent earnings are below average.
  • Wesfarmers's 1-year earnings growth exceeds its 5-year average (155.2% vs -5.1%)
  • Wesfarmers's earnings growth has exceeded the Global Consumer Retailing industry average in the past year (155.2% vs 13.2%).
Earnings and Revenue History
Wesfarmers's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Raw Data

All data from Wesfarmers Company Filings, last reported 6 months ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

ASX:WES Past Revenue, Cash Flow and Net Income Data
Date (Data in AUD Millions) Revenue Net Income * G+A Expenses R&D Expenses
2017-12-31 69,430.00 1,508.00 13,780.00
2017-09-30 68,937.00 2,190.50 13,618.50
2017-06-30 68,444.00 2,873.00 13,457.00
2017-03-31 67,940.00 1,732.00 13,424.00
2016-12-31 67,436.00 591.00 13,391.00
2016-09-30 66,708.50 499.00 13,137.50
2016-06-30 65,981.00 407.00 12,884.00
2016-03-31 64,960.00 1,432.00 12,490.00
2015-12-31 63,939.00 2,457.00 12,096.00
2015-09-30 63,193.00 2,448.50 11,975.00
2015-06-30 62,447.00 2,440.00 11,854.00
2015-03-31 61,927.50 2,027.50 11,735.00
2014-12-31 61,408.00 1,615.00 11,616.00
2014-09-30 60,794.50 1,562.50 11,448.00
2014-06-30 60,181.00 1,510.00 11,280.00
2013-12-31 57,878.00 2,114.00 10,824.00
2013-09-30 57,813.50 2,121.00 10,851.50
2013-06-30 57,749.00 2,128.00 10,879.00
2013-03-31 59,426.00 2,248.00 11,135.00
2012-12-31 59,020.00 2,235.00 10,969.00
2012-09-30 58,550.00 2,180.50 10,821.50
2012-06-30 58,080.00 2,126.00 10,674.00
2012-03-31 57,277.50 2,025.50 10,529.00
2011-12-31 56,475.00 1,925.00 10,384.00
2011-09-30 55,675.00 1,923.50 10,273.00

*GAAP earnings excluding extraordinary items.

Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Wesfarmers has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).
  • Wesfarmers used its assets less efficiently than the Global Consumer Retailing industry average last year based on Return on Assets.
  • Wesfarmers has significantly improved its use of capital last year versus 3 years ago (Return on Capital Employed).
X
Past performance checks
We assess Wesfarmers's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Consumer Retailing industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Wesfarmers has a total score of 3/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Wesfarmers's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Wesfarmers's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Wesfarmers's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
  • Wesfarmers's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Wesfarmers's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of physical assets or inventory.
  • Debt is covered by short term assets, assets are 2.1x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
Raw Data

All data from Wesfarmers Company Filings, last reported 6 months ago.

ASX:WES Past Debt and Equity Data
Date (Data in AUD Millions) Total Equity Total Debt Cash & Short Term Investments
2017-12-31 22,829.00 5,437.00 1,842.00
2017-09-30 22,829.00 5,437.00 1,842.00
2017-06-30 23,941.00 5,413.00 1,013.00
2017-03-31 23,941.00 5,413.00 1,013.00
2016-12-31 23,767.00 6,074.00 738.00
2016-09-30 23,767.00 6,074.00 738.00
2016-06-30 22,949.00 7,303.00 611.00
2016-03-31 22,949.00 7,303.00 611.00
2015-12-31 24,962.00 6,282.00 694.00
2015-09-30 24,962.00 6,282.00 694.00
2015-06-30 24,781.00 6,528.00 711.00
2015-03-31 24,781.00 6,528.00 711.00
2014-12-31 24,744.00 6,143.00 1,505.00
2014-09-30 24,744.00 6,143.00 1,505.00
2014-06-30 25,987.00 5,065.00 2,067.00
2013-12-31 25,729.00 6,433.00 2,660.00
2013-09-30 25,729.00 6,433.00 2,660.00
2013-06-30 26,022.00 5,816.00 2,649.00
2013-03-31 26,022.00 5,816.00 2,371.00
2012-12-31 25,874.00 5,808.00 2,972.00
2012-09-30 25,874.00 5,808.00 2,972.00
2012-06-30 25,627.00 5,718.00 2,316.00
2012-03-31 25,627.00 5,718.00 2,316.00
2011-12-31 25,475.00 5,653.00 3,369.00
2011-09-30 25,475.00 5,653.00 3,369.00
  • Wesfarmers's level of debt (23.8%) compared to net worth is satisfactory (less than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (22.4% vs 23.8% today).
  • Debt is well covered by operating cash flow (82.3%, greater than 20% of total debt).
  • Interest payments on debt are well covered by earnings (EBIT is 20x coverage).
X
Financial health checks
We assess Wesfarmers's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by operating cash flow? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Wesfarmers has a total score of 4/6, see the detailed checks below.
For companies that are loss making and have been so on average in the past we replace the last 2 checks with:
  1. Does cash and short term investments cover stable operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)
  2. Does cash and short term investments cover growing operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Wesfarmers's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
4.51%
Current annual income from Wesfarmers dividends. Estimated to be 4.7% next year.
If you bought A$2,000 of Wesfarmers shares you are expected to receive A$90 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Wesfarmers's pays a higher dividend yield than the bottom 25% of dividend payers in Australia (2.4%).
  • Wesfarmers's dividend is below the markets top 25% of dividend payers in Australia (5.54%).
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
Raw Data
ASX:WES Annualized Past and Future Dividends
Data Point Source Value
Past Annualized Dividend Yield S&P Global Market Data See Below
Past Dividends per Share Company Filings/ Annualized Dividend Payments See Below
Future Dividends per Share Estimates Average of up to 13 Analyst Estimates (S&P Global) See Below
Oceania Consumer Retailing Industry Average Dividend Yield Market Cap Weighted Average of 5 Stocks 3.9%
Australia Market Average Dividend Yield Market Cap Weighted Average of 499 Stocks 4.1%
Australia Minimum Threshold Dividend Yield 10th Percentile 1.3%
Australia Bottom 25% Dividend Yield 25th Percentile 2.4%
Australia Top 25% Dividend Yield 75th Percentile 5.5%

Industry and Market average data is calculated daily.

Note all dividend per share amounts are annualized and not quarterly or other period.

ASX:WES Future Dividends Estimate Data
Date (Data in A$) Dividend per Share (annual) Avg. No. Analysts
2022-06-30 2.41 2.00
2021-06-30 2.43 3.00
2020-06-30 2.34 13.00
2019-06-30 2.28 14.00
2018-06-30 2.19 14.00
ASX:WES Past Annualized Dividends Data
Date (Data in A$) Dividend per share (annual) Avg. Yield (%)
2018-02-20 2.230 5.026
2017-08-16 2.400 5.632
2017-02-14 1.980 4.672
2016-09-28 1.860 4.429
2015-08-20 2.000 4.888
2014-11-27 1.940 4.561
2014-10-02 1.933 4.458
2013-08-15 1.855 4.269
2012-08-16 1.700 4.357
2011-09-22 1.546 4.927
2011-08-18 1.546 4.955
2011-02-17 1.391 4.253
2010-09-24 1.288 3.802
2010-08-19 1.288 3.809
2010-02-18 1.185 3.819
2009-08-20 1.133 3.958
2009-02-16 1.906 8.772
2008-08-21 2.061 9.812
2008-07-24 2.112 5.939

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Dividends per share have been volatile in the past 10 years (annual drop of over 20%).
  • Dividends per share have increased over the past 10 years.
Current Payout to shareholders
What portion of Wesfarmers's earnings are paid to the shareholders as a dividend.
  • Dividends paid are not well covered by net profit (0.6x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be covered by net profit (1.2x coverage).
X
Income/ dividend checks
We assess Wesfarmers's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 1.3%) - if not then the rest of the checks are ignored.
  2. Is current dividend yield above the bottom 25% of dividend payers? (1 check)
  3. Is current dividend yield above the top 25% of dividend payers? (1 check)
  4. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  5. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  6. How sustainable is the dividend, can Wesfarmers afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  7. Wesfarmers has a total score of 3/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Wesfarmers's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Rob Scott, image provided by Google.
Rob Scott
COMPENSATION A$5,607,627
AGE 48
TENURE AS CEO 0.7 years
CEO Bio

Mr. Robert G. Scott, also known as Rob, has been Managing Director of Wesfarmers Limited since November 16, 2017 and serves as its Director. Mr. Scott served as Deputy Chief Executive Officer at Wesfarmers Limited since February 14, 2017 until November 14, 2017. Mr. Scott served as Managing Director of Wesfarmers Industrials Division at Wesfarmers Limited since August 2015 until July 1, 2017. Mr. Scott served as Managing Director of Wesfarmers Chemicals, Energy & Fertilisers at Wesfarmers Limited since August 2015. Mr. Scott served as Finance Director of Coles at Wesfarmers Limited since February 1, 2013. He served as Finance Director at Coles Group Limited since February 1, 2013. Mr. Scott served as Managing Director of Financial Services at Wesfarmers Limited. He joined Wesfarmers in 1993. He has experience in investment banking and financial services with Deutsche Bank in Australia and Asia. He rejoined Wesfarmers in business development in 2004. Mr. Scott served as Managing Director of Insurance Division at Wesfarmers Ltd. from 2007 to February 2013. He served as Deputy Managing Director of Insurance Division of Wesfarmers Ltd. since June 2007 and Executive General Manager of Strategic Development for its Insurance Division since May 2006. Mr. Buckley worked for Wesfarmers from 1993 to 1994. Mr. Scott started with Wesfarmers in 1993 before moving into investment banking, where he held various roles in corporate finance and mergers and acquisitions in Australia and Asia. He rejoined Wesfarmers in business development in 2004. He served as the President of the Insurance Council of Australia. He served as Chairman of the Board at Lumley General Insurance (N.Z.) Limited. He served as a Director of the Insurance Council of Australia. He is dual Olympian in the sport of rowing and was a silver medallist at the Atlanta Olympics.

CEO Compensation
  • Rob's compensation has increased by more than 20% in the past year.
  • Rob's compensation appears reasonable for a company of this size and profit level.
Management Team Tenure

Average tenure and age of the Wesfarmers management team in years:

2.3
Average Tenure
50
Average Age
  • The tenure for the Wesfarmers management team is about average.
Management Team

Rob Scott

TITLE
MD & Director
COMPENSATION
A$6M
AGE
48
TENURE
0.7 yrs

Guy Russo

TITLE
CEO of Department Stores Division & MD of Target
COMPENSATION
A$6M
AGE
58

John Durkan

TITLE
Managing Director of Coles Division
COMPENSATION
A$6M
AGE
54
TENURE
4 yrs

Mike Schneider

TITLE
MD of Bunnings Group and MD of Bunnings Australia & New Zeland
COMPENSATION
A$1M
AGE
47
TENURE
2.3 yrs

Anthony Gianotti

TITLE
Chief Financial Officer
AGE
49
TENURE
0.7 yrs

Aleksandra Spaseska

TITLE
General Manager of Investor Relations

Maya vanden Driesen

TITLE
Group General Counsel
TENURE
3.5 yrs

Cathy Bolt

TITLE
Media & External Affairs Manager

Olivier Chretien

TITLE
Managing Director of Business Development and Corporate Planning
AGE
51
TENURE
2.9 yrs

Jenny Bryant

TITLE
Chief Human Resources Officer
TENURE
1.8 yrs
Board of Directors Tenure

Average tenure and age of the Wesfarmers board of directors in years:

8
Average Tenure
60
Average Age
  • The tenure for the Wesfarmers board of directors is about average.
Board of Directors

Michael Chaney

TITLE
Non Executive Chairman
COMPENSATION
A$768K
AGE
68
TENURE
2.7 yrs

Rob Scott

TITLE
MD & Director
COMPENSATION
A$6M
AGE
48

Tony Howarth

TITLE
Independent Non-Executive Director
COMPENSATION
A$415K
AGE
66
TENURE
11 yrs

Diane Smith-Gander

TITLE
Independent Non-Executive Director
COMPENSATION
A$399K
AGE
60
TENURE
8.9 yrs

Wayne Osborn

TITLE
Independent Non-Executive Director
COMPENSATION
A$285K
AGE
67
TENURE
8.3 yrs

James Graham

TITLE
Non-Executive Director
COMPENSATION
A$259K
AGE
70
TENURE
20.2 yrs

Vanessa Wallace

TITLE
Independent Non-Executive Director
COMPENSATION
A$259K
AGE
55
TENURE
8 yrs

Paul Bassat

TITLE
Independent Non-Executive Director
COMPENSATION
A$259K
AGE
50
TENURE
5.7 yrs

Jennifer Westacott

TITLE
Independent Non-Executive Director
COMPENSATION
A$273K
AGE
58
TENURE
5.3 yrs

Bill English

TITLE
Director
TENURE
0.3 yrs
Recent Insider Trading
  • More shares have been bought than sold by Wesfarmers insiders in the past 3 months, but not in substantial volumes.
Who owns this company?
X
Management checks
We assess Wesfarmers's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Wesfarmers has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

News

External News
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Simply Wall St News

What Do Analysts Think About Wesfarmers Limited's (ASX:WES) Profit Margin?

With analysts forecasting … Wesfarmers Limited (ASX:WES) to … earnings growth of 23.76% annualised

Simply Wall St -

Is Wesfarmers Limited (ASX:WES) A Financially Strong Company?

Most investors favour these big stocks due to their strong balance sheet and high market liquidity, meaning there are an adundance of stock in the public market available for trading. … In times of low liquidity in the market, these firms won’t be left high and dry. … Assessing the most recent data for WES, I will take you through the key ratios to measure financial health, in particular, its solvency and liquidity.

Simply Wall St -

Understanding Your Return On Investment In Wesfarmers Limited (ASX:WES)

and want a simplistic look at the return on Wesfarmers Limited (ASX:WES) stock. … Your equity share is granted in return for the capital provided to the business to operate, and in order for an investment to be successful the business has to create earnings from the funds that make up this capital … This is because the actual cash flow generated by the business dictates the potential for income (dividends) and capital appreciation (price increases), which are the two ways to achieve positive returns when buying a stock.

Simply Wall St -

Is Wesfarmers Limited (ASX:WES) Expensive For A Reason? A Look At The Intrinsic Value

by taking the expected future cash flows and discounting them to their present value. … discounted cash flows (DCF). … If you want to learn more about discounted cash flow, the basis for my calcs can be read in detail in the Simply Wall St analysis model

Simply Wall St -

Why Wesfarmers Limited (ASX:WES) May Not Be As Efficient As Its Industry

I am writing today to help inform people who are new to the stock market. … and want to begin learning the link between Wesfarmers Limited (ASX:WES)’s return fundamentals and stock market performance. … Wesfarmers Limited (ASX:WES) delivered a less impressive 6.61% ROE over the past year, compared to the 11.53% return generated by its industry.

Simply Wall St -

Does Wesfarmers Limited's (ASX:WES) June Stock Price Reflect Its Future Growth?

Looking at Wesfarmers Limited’s (ASX:WES) fundamentals some investors are wondering if its last closing price of A$49.61 represents a good value for money for this high growth stock. … >Where's the growth. … If you are bullish about Wesfarmers's growth potential then you are certainly not alone

Simply Wall St -

Is It Time To Sell Wesfarmers Limited (ASX:WES) Based Off Its PE Ratio?

But can investors make a closing judgement of the company’s value based on this hefty multiple. … The answer is no, since important variables like the company’s potential to grow and debt levels are ignored in the PE’s calculation … This article will cover some key aspects we should consider in order to determine the best multiple to be used for

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Are Wesfarmers Limited's (ASX:WES) Interest Costs Too High?

its financial health remains the key to continued success. … I will provide an overview of Wesfarmers’s financial liquidity and leverage to give you an idea of Wesfarmers’s position to take advantage of potential acquisitions or comfortably endure future downturns … Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself

Simply Wall St -

Should You Be Tempted To Sell Wesfarmers Limited (ASX:WES) Because Of Its PE Ratio?

Formula Price-Earnings Ratio = Price per share ÷ Earnings per share P/E Calculation for WES Price per share = A$45.56 Earnings per share = A$1.333 ∴ Price-Earnings Ratio = A$45.56 ÷ A$1.333 = 34.2x The P/E ratio isn’t a metric you view in isolation and only becomes useful when you compare it against other similar companies. … For example, if you are inadvertently comparing riskier firms with WES, then WES’s P/E would naturally be higher than its peers since investors would reward its lower risk with a higher price. … If this assumption does not hold true, WES’s higher P/E ratio may be because firms in our peer group are being undervalued by the market.

Simply Wall St -

Calculating The Intrinsic Value Of Wesfarmers Limited (ASX:WES)

5-year cash flow forecast 2018 2019 2020 2021 2022 Levered FCF (A$, Millions) A$2,511.98 A$2,514.30 A$2,748.95 A$3,072.72 A$3,200.05 Source Analyst x4 Analyst x4 Analyst x4 Analyst x1 Extrapolated @ (4.14%) Present Value Discounted @ 8.55% A$2,314.08 A$2,133.74 A$2,149.08 A$2,212.95 A$2,123.09 Present Value of 5-year Cash Flow (PVCF)= A$10,933 The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. … Terminal Value (TV) = FCF2022 × (1 + g) ÷ (r – g) = A$3,200 × (1 + 2.8%) ÷ (8.6% – 2.8%) = A$56,774 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = A$56,774 / ( 1 + 8.6%)5 = A$37,667 The total value, or equity value, is then the sum of the present value of the cash flows, which in this case is A$48,600. … ASX:WES Intrinsic Value May 21st 18 Important assumptions Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows.

Simply Wall St -

Company Info

Map
Description

Wesfarmers Limited engages in the retail, coal mining and production, gas processing and distribution, industrial and safety product distribution, chemicals and fertilizers manufacturing, and investment businesses in Australia, New Zealand, the United Kingdom, and internationally. The company operates 801 Coles supermarkets; 883 liquor stores under the Liquorland, Vintage Cellars, and First Choice Liquor brands; 89 hotels; 702 convenience outlets; and an online supermarket. It also offers home, car, and landlord insurance products, as well as credit cards; home improvement and outdoor living products through warehouse stores, smaller format stores, trade centers, and frame and truss sites under the Bunnings name; apparel, homewares, and general merchandise through 303 Target stores and 220 Kmart stores, as well as through online; automotive services, repairs, and tires through 251 Kmart Tyre & Auto Service centers; and office products and solutions through Officeworks stores. In addition, the company supplies building materials; retails office and technology products; manufactures and supplies ammonia, ammonium nitrate, industrial chemicals, sodium cyanide, polyvinyl chloride resins, and wood-plastic composite decking and screening products; extracts and distributes LPG and LNG; and manufactures, imports, and distributes phosphate, nitrogen, and potassium-based fertilizers. Further, the company supplies industrial supplies and safety products; provides risk management and compliance services; offers industrial and corporate workwear; distributes industrial gas; and holds interests in the Curragh and the Bengalla coal mines. Wesfarmers Limited was founded in 1914 and is based in Perth, Australia.

Details
Name: Wesfarmers Limited
WES
Exchange: ASX
Founded: 1914
A$56,692,000,000
1,133,840,000
Website: http://www.wesfarmers.com.au
Address: Wesfarmers Limited
Brookfield Place Tower 2,
Level 14,
Perth,
Western Australia, 6000,
Australia
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
ASX WES Ordinary Shares Australian Securities Exchange AU AUD 02. Jan 1992
OTCPK WFAF.F Ordinary Shares Pink Sheets LLC US USD 02. Jan 1992
DB WF3 Ordinary Shares Deutsche Boerse AG DE EUR 02. Jan 1992
CHIA WES Ordinary Shares Chi-X Australia AU AUD 02. Jan 1992
OTCPK WFAF.Y ADR NEW 2014 Pink Sheets LLC US USD 16. Oct 2008
Number of employees
Current staff
Staff numbers
223,000
Wesfarmers employees.
Industry
Hypermarkets and Super Centers
Consumer Retailing
Company Analysis and Financial Data Status
Area Date (UTC time)
Company Analysis updated: 2018/07/23 07:44
End of day share price update: 2018/07/23 00:00
Last estimates confirmation: 2018/07/20
Last earnings update: 2017/12/31
Last annual earnings update: 2017/06/30


All dates and times in UTC. All financial data provided by Standard & Poor’s Capital IQ.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.