ASX:WES

Stock Analysis Report

Executive Summary

Wesfarmers Limited primarily engages in the retail business in Australia, New Zealand, the United Kingdom, and internationally.


Snowflake Analysis

Outstanding track record average dividend payer.


Similar Companies

Share Price & News

How has Wesfarmers's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: WES has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-6.0%

WES

-3.1%

AU Multiline Retail

-2.2%

AU Market


1 Year Return

30.1%

WES

25.1%

AU Multiline Retail

11.6%

AU Market

Return vs Industry: WES exceeded the Australian Multiline Retail industry which returned 25.1% over the past year.

Return vs Market: WES exceeded the Australian Market which returned 11.6% over the past year.


Shareholder returns

WESIndustryMarket
7 Day-6.0%-3.1%-2.2%
30 Day-5.3%-1.3%-2.2%
90 Day0.4%5.2%2.2%
1 Year35.0%30.1%35.6%25.1%16.5%11.6%
3 Year64.7%-0.4%56.4%0.2%36.2%18.1%
5 Year77.6%-2.5%73.1%0.1%46.7%14.1%

Price Volatility Vs. Market

How volatile is Wesfarmers's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Wesfarmers undervalued compared to its fair value and its price relative to the market?

24.22x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: WES (A$42.55) is trading above our estimate of fair value (A$40.56)

Significantly Below Fair Value: WES is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: WES is poor value based on its PE Ratio (24.2x) compared to the Multiline Retail industry average (17x).

PE vs Market: WES is poor value based on its PE Ratio (24.2x) compared to the Australian market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: WES is poor value based on its PEG Ratio (14.5x)


Price to Book Ratio

PB vs Industry: WES is overvalued based on its PB Ratio (5x) compared to the XO Multiline Retail industry average (1.7x).


Next Steps

Future Growth

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

1.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: WES's forecast earnings growth (1.7% per year) is above the savings rate (1.1%).

Earnings vs Market: WES's earnings (1.7% per year) are forecast to grow slower than the Australian market (9.4% per year).

High Growth Earnings: WES's earnings are forecast to grow, but not significantly.

Revenue vs Market: WES's revenue (4% per year) is forecast to grow slower than the Australian market (4.2% per year).

High Growth Revenue: WES's revenue (4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: WES's Return on Equity is forecast to be low in 3 years time (19.9%).


Next Steps

Past Performance

How has Wesfarmers performed over the past 5 years?

0.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: WES has high quality earnings.

Growing Profit Margin: WES's current net profit margins (6.9%) are higher than last year (6.6%).


Past Earnings Growth Analysis

Earnings Trend: WES's earnings have grown by 0.9% per year over the past 5 years.

Accelerating Growth: WES's earnings growth over the past year (9.7%) exceeds its 5-year average (0.9% per year).

Earnings vs Industry: WES earnings growth over the past year (9.7%) exceeded the Multiline Retail industry 1%.


Return on Equity

High ROE: WES's Return on Equity (20.4%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Wesfarmers's financial position?


Financial Position Analysis

Short Term Liabilities: WES's short term assets (A$6.2B) do not cover its short term liabilities (A$7.2B).

Long Term Liabilities: WES's short term assets (A$6.2B) do not cover its long term liabilities (A$9.1B).


Debt to Equity History and Analysis

Debt Level: WES's debt to equity ratio (30.4%) is considered satisfactory.

Reducing Debt: WES's debt to equity ratio has increased from 25.1% to 30.4% over the past 5 years.

Debt Coverage: WES's debt is well covered by operating cash flow (97%).

Interest Coverage: WES's interest payments on its debt are well covered by EBIT (10.4x coverage).


Balance Sheet

Inventory Level: WES has a high level of physical assets or inventory.

Debt Coverage by Assets: WES's debt is covered by short term assets (assets are 2.1x debt).


Next Steps

Dividend

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

4.18%

Current Dividend Yield


Dividend Yield vs Market

company4.2%marketbottom25%2.4%markettop25%5.5%industryaverage2.7%forecastin3Years3.7%

Current dividend yield vs market & industry

Notable Dividend: WES's dividend (4.18%) is higher than the bottom 25% of dividend payers in the Australian market (2.37%).

High Dividend: WES's dividend (4.18%) is low compared to the top 25% of dividend payers in the Australian market (5.46%).


Stability and Growth of Payments

Stable Dividend: WES's dividend payments have been volatile in the past 10 years.

Growing Dividend: WES's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (87.1%), WES's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: WES's dividends in 3 years are forecast to be covered by earnings (88.7% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.3yrs

Average management tenure


CEO

Rob Scott (49yo)

2.3yrs

Tenure

AU$6,748,532

Compensation

Mr. Robert G. Scott, also known as Rob, has been Managing Director, Chief Executive Officer and Executive Director of Wesfarmers Limited since November 16, 2017. Mr. Scott served as Deputy Chief Executive  ...


CEO Compensation Analysis

Compensation vs Market: Rob's total compensation ($USD4.46M) is about average for companies of similar size in the Australian market ($USD3.67M).

Compensation vs Earnings: Rob's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Robert Scott
MD & Director2.3yrsAU$6.75m0.027% A$13.5m
Anthony Gianotti
Chief Financial Officer2.3yrsAU$3.56m0.027% A$13.4m
Michael Schneider
MD of Bunnings Group and MD of Bunnings Australia & New Zealand2.8yrsAU$4.17m0.018% A$9.0m
David Baxby
Managing Director of Industrials Division2.5yrsAU$3.26m0.012% A$6.0m
Ian Bailey
Head of the Australian Conglomerate's Department Stores Division & Managing Director of Kmart1.3yrsAU$2.42m0.014% A$6.9m
Steven Cain
Managing Director of Coles Group1.4yrsAU$1.99m0.00088% A$440.3k
John Durkan
Senior Advisor1.4yrsAU$3.25m0.014% A$7.2m
Erik Plessis
Manager of Investor Relations0yrsno datano data
Maya vanden Driesen
Group General Counsel5.1yrsno datano data
Cathy Bolt
Media & External Affairs Manager0yrsno datano data

2.3yrs

Average Tenure

49.5yo

Average Age

Experienced Management: WES's management team is considered experienced (2.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Robert Scott
MD & Director2.3yrsAU$6.75m0.027% A$13.5m
Michael Chaney
Non Executive Chairman4.3yrsAU$785.16k0.0077% A$3.9m
Wayne Osborn
Independent Non-Executive Director9.9yrsAU$296.09k0.0013% A$650.5k
Sharon Warburton
Non-Executive Director0.5yrsno data0.000090% A$45.0k
Diane Smith-Gander
Independent Non-Executive Director10.5yrsAU$284.09k0.0011% A$530.4k
Vanessa Wallace
Independent Non-Executive Director9.6yrsAU$270.09k0.0012% A$595.4k
S. English
Non-Executive Director1.8yrsAU$284.09k0.00010% A$50.0k
Jennifer Westacott
Independent Non-Executive Director6.8yrsAU$284.09k0.00060% A$300.2k
Michael Roche
Non-Executive Director1yrsAU$98.96k0.00018% A$90.1k

5.5yrs

Average Tenure

59yo

Average Age

Experienced Board: WES's board of directors are considered experienced (5.5 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Wesfarmers Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Wesfarmers Limited
  • Ticker: WES
  • Exchange: ASX
  • Founded: 1914
  • Industry: General Merchandise Stores
  • Sector: Retail
  • Market Cap: AU$50.036b
  • Shares outstanding: 1.13b
  • Website: https://www.wesfarmers.com.au

Number of Employees


Location

  • Wesfarmers Limited
  • Brookfield Place Tower 2
  • Level 14
  • Perth
  • Western Australia
  • 6000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
WFAF.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
WESASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJan 1992
WF3DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
WESCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJan 1992
WFAF.YOTCPK (Pink Sheets LLC)ADR NEW 2014USUSDOct 2008

Biography

Wesfarmers Limited primarily engages in the retail business in Australia, New Zealand, the United Kingdom, and internationally. It is involved in the retail sale of building material, and home and garden improvement products through its Bunnings stores; apparel, homewares, and general merchandise, including toys, leisure, entertainment, home, consumables, electrical products, and accessories through its 231 Kmart stores and 289 Target stores; and office products and solutions, such as office supplies, technology, furniture, art supplies, education resources, and helpful services, including print and copy and on-site tech support through its 167 Officeworks stores. The company also manufactures and supplies ammonia, ammonium nitrate, and industrial chemicals; manufactures, imports, and distributes phosphate, nitrogen, and potassium-based fertilizers in blended, compound, and liquid form; supplies polyvinyl chloride resins used in a range of products comprising piping, cable insulation, floor coverings, building profiles, packaging, and compounds; produces wood-plastic composite products from recycled wood and plastic; and manufactures and distributes sodium cyanide, which is used in the mining industry for gold extraction. In addition, it extracts, markets, and distributes liquefied petroleum gas and liquefied natural gas; distributes tools, safety gear, work wear, and industrial supplies; supplies industrial, specialty, and medical gases; supplies and distributes maintenance, repair, and operating products; and provides risk management and compliance services, as well as offers land management solutions for the agricultural and mining sectors. Further, the company offers its products online. Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/25 10:33
End of Day Share Price2020/02/25 00:00
Earnings2019/12/31
Annual Earnings2019/06/30


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.