Wesfarmers Limited Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Investors in Wesfarmers Limited (ASX:WES) had a good week, as its shares rose 7.1% to close at AU$61.91 following the release of its half-yearly results. The result was positive overall - although revenues of AU$23b were in line with what the analysts predicted, Wesfarmers surprised by delivering a statutory profit of AU$1.26 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Wesfarmers

Following last week's earnings report, Wesfarmers' 14 analysts are forecasting 2024 revenues to be AU$43.9b, approximately in line with the last 12 months. Statutory per share are forecast to be AU$2.24, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$43.8b and earnings per share (EPS) of AU$2.20 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.1% to AU$56.91. It looks as though they previously had some doubts over whether the business would live up to their expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Wesfarmers at AU$66.60 per share, while the most bearish prices it at AU$43.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Wesfarmers' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.0% growth on an annualised basis. This is compared to a historical growth rate of 10% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Wesfarmers.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Wesfarmers. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Wesfarmers going out to 2026, and you can see them free on our platform here..

Even so, be aware that Wesfarmers is showing 2 warning signs in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.