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Wesfarmers Limited (AU:WES)
:WES

Wesfarmers Limited (WES) AI Stock Analysis

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AU

Wesfarmers Limited

(OTC:WES)

Rating:75Outperform
Price Target:
AU$95.00
▲(12.29%Upside)
Wesfarmers Limited's overall stock score is driven by its strong financial performance and positive earnings call highlights. Despite a stretched valuation and some technical indicators suggesting an overbought condition, the company’s strategic initiatives and robust operational performance across key segments provide a solid growth outlook.
Positive Factors
Earnings Performance
WES reported strong 2H24/FY24 results with FY24 group revenue of A$44.2B +1.5% YoY and group EBIT of A$4.0B +3.3% YoY.
Market Position
Wesfarmers continues to gain market share and maintain resilient margins.
Negative Factors
Growth Outlook
The Bunnings segment has shown a softer outlook with a first 8-week run-rate below expected growth.

Wesfarmers Limited (WES) vs. iShares MSCI Australia ETF (EWA)

Wesfarmers Limited Business Overview & Revenue Model

Company DescriptionWesfarmers Limited engages in the retail business in Australia, New Zealand, the United Kingdom, and internationally. The company is involved in the retail sale of building materials, home and garden improvement, and outdoor living products through its Bunnings stores; apparel and general merchandise, including toys, leisure, entertainment, home, and consumables; and office products and solutions, such as stationery, technology, furniture, art supplies, and learning and development resources, as well as print and create, and technical support services through its 168 Officeworks stores. It also provides hardware and software repairs, system security solutions, wireless and wired networking services, virus and spyware prevention and removal, and data backup and recovery solutions. In addition, the company manufactures and supplies ammonia, ammonium nitrate, and industrial chemicals; manufactures, imports, and distributes phosphate, nitrogen, and potassium-based fertilizers; supplies polyvinyl chloride resins; produces wood-plastic composite products; and manufactures and distributes sodium cyanide. Further, it produces and distributes liquefied petroleum gas and liquefied natural gas; supplies and distributes maintenance, repair, operating products, and industrial safety products and services; manufacturers and markets industrial, medical, and specialty gases; supplies tools, safety gear, personal protective equipment, electricals, work wear, and industrial supplies; and provides risk management and compliance services, as well as footwear; safety products, uniforms, engineering supplies, and packaging services; and engages in other businesses. Additionally, the company provides health, beauty, and wellbeing products; clinical cosmetic and skin care treatments; retail support services; distributes pharmaceutical goods; and operates online marketplace and data sharing platform. Wesfarmers Limited was founded in 1914 and is headquartered in Perth, Australia.
How the Company Makes MoneyWesfarmers Limited generates revenue primarily through its retail operations, which account for the majority of its income. The company's retail brands, including Bunnings Warehouse, Kmart, Target, and Officeworks, contribute significantly to its earnings by selling a wide range of products from home improvement and office supplies to clothing and general merchandise. In addition to retail, Wesfarmers has significant operations in the industrials sector, including chemicals and fertilizers through its subsidiary CSBP, and industrial and safety products through Blackwoods. The company also engages in energy production and distribution, which adds to its diversified revenue streams. Strategic acquisitions and partnerships further bolster its market presence and financial performance.

Wesfarmers Limited Earnings Call Summary

Earnings Call Date:Feb 19, 2025
(Q2-2025)
|
% Change Since: 11.83%|
Next Earnings Date:Aug 28, 2025
Earnings Call Sentiment Positive
The earnings call presents a largely positive outlook, with strong financial and operational performance across key segments like Bunnings and Kmart Group, alongside successful strategic actions. However, challenges in the industrial segment, supply chain issues, and concerns in the lithium market present notable headwinds.
Q2-2025 Updates
Positive Updates
Strong Financial Performance
Wesfarmers delivered growth in sales, earnings, and dividends despite a challenging trading environment. Net profit after tax increased by 2.9% to $1.5 billion, and the dividend grew by 4.1%.
Successful Portfolio Actions
Sale of Coregas for $770 million and the wind down of Catch to improve earnings in FY '26. The divestment of WesCEF's LPG and LNG and strategic acquisitions expanded Officeworks' digital education offer and supported Health's digital strategy.
Bunnings and Kmart Group Performance
Bunnings grew sales and earnings despite tough market conditions, and Kmart Group's earnings increased by 7.2%, driven by strong value credentials and efficiency improvements.
Environmental and Community Contributions
A 2.5% reduction in Scope 1 and 2 emissions and $55 million in community contributions, supporting over 8,000 organizations.
Resilience and Future Growth Positioning
The group demonstrated resilience and is well-positioned for future growth with investments in lithium hydroxide, health sector, and new retail media strategies.
Negative Updates
Supply Chain and Restructuring Costs
Wesfarmers Health faced higher supply chain costs and incurred restructuring costs of $4 million, impacting earnings growth.
Challenges in Industrial and Safety Segment
Revenue declined by 1.9%, with earnings decreasing by 8.2% due to challenging economic conditions and restructuring costs.
Catch's Financial Losses and Closure
Catch reported a loss of $39 million, with a planned wind down expected to incur additional costs of $50 million to $60 million in the second half.
Lithium Market Pricing Concerns
Concerns about current lithium hydroxide prices of USD 9,300 per tonne and the ability to achieve profitability at these levels, alongside industry skepticism of Western Australia's processing capabilities.
Company Guidance
During the Wesfarmers 2025 Half Year Results Briefing, the company reported a net profit after tax of $1.5 billion, representing a 2.9% increase, and announced a fully franked dividend of $0.95 per share, up 4.1% from the previous period. Bunnings and Kmart Group were notable performers, with Bunnings achieving a 3.1% sales growth and Kmart Group reporting a 7.2% increase in earnings. WesCEF delivered a solid performance, benefiting from improved ammonium nitrate contracts, while the Covalent Lithium JV progressed with construction 95% complete. Health continued its transformation, facing supply chain cost pressures but showing promising growth in its Consumer segment. The group also undertook significant portfolio actions, including the sale of Coregas for $770 million and the wind down of Catch, aiming to strengthen future earnings. Wesfarmers emphasized a strong focus on productivity and efficiency to navigate current market challenges while maintaining a robust balance sheet and capital expenditure guidance at $1.1 to $1.3 billion for the full year.

Wesfarmers Limited Financial Statement Overview

Summary
Wesfarmers Limited demonstrates solid financial health with consistent revenue growth, strong profitability, and effective cash flow management. The company maintains impressive returns on equity and robust cash flow metrics, though it carries moderate leverage.
Income Statement
85
Very Positive
Wesfarmers Limited has shown a steady growth in revenue, with a revenue growth rate of approximately 1.45% from 2023 to 2024. The gross profit margin is strong at 34.56%, and the net profit margin is healthy at 5.80%. The EBIT and EBITDA margins are 8.42% and 12.61%, respectively, indicating solid core profitability and operational efficiency.
Balance Sheet
75
Positive
The company maintains a moderate debt-to-equity ratio of 1.31, highlighting a balanced approach to leveraging equity with debt. The return on equity stands at 29.79%, reflecting strong profitability relative to shareholder equity. However, the equity ratio is 31.44%, indicating a moderate reliance on external financing.
Cash Flow
78
Positive
Wesfarmers has demonstrated positive cash flow generation with a free cash flow growth rate of 21.68% from 2023 to 2024. The operating cash flow to net income ratio is 1.80, signifying robust cash generation relative to net income. The free cash flow to net income ratio is 1.38, underscoring the company's strong cash conversion capabilities.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
44.92B44.05B43.42B36.68B33.80B30.75B
Gross Profit
11.18B15.22B6.48B5.83B5.91B4.93B
EBIT
5.63B3.71B3.83B3.36B3.61B2.69B
EBITDA
5.26B5.55B5.55B5.04B5.12B4.06B
Net Income Common Stockholders
2.60B2.56B2.46B2.35B2.38B1.70B
Balance SheetCash, Cash Equivalents and Short-Term Investments
487.00M835.00M673.00M705.00M3.02B2.91B
Total Assets
27.71B27.31B27.14B28.05B26.88B26.02B
Total Debt
10.82B11.28B11.17B12.08B10.13B9.90B
Net Debt
10.34B10.44B10.50B11.38B7.10B6.99B
Total Liabilities
18.74B18.72B18.86B20.07B17.17B16.67B
Stockholders Equity
8.97B8.59B8.28B7.98B9.71B9.34B
Cash FlowFree Cash Flow
3.23B3.52B2.89B1.16B2.51B3.68B
Operating Cash Flow
4.27B4.59B4.18B2.30B3.38B4.55B
Investing Cash Flow
-1.03B-1.37B-552.00M-1.19B-642.00M642.00M
Financing Cash Flow
-3.56B-3.06B-3.66B-3.43B-2.63B-3.07B

Wesfarmers Limited Technical Analysis

Technical Analysis Sentiment
Positive
Last Price84.60
Price Trends
50DMA
77.62
Positive
100DMA
75.48
Positive
200DMA
72.82
Positive
Market Momentum
MACD
1.72
Positive
RSI
73.59
Negative
STOCH
84.41
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:WES, the sentiment is Positive. The current price of 84.6 is above the 20-day moving average (MA) of 82.45, above the 50-day MA of 77.62, and above the 200-day MA of 72.82, indicating a bullish trend. The MACD of 1.72 indicates Positive momentum. The RSI at 73.59 is Negative, neither overbought nor oversold. The STOCH value of 84.41 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:WES.

Wesfarmers Limited Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
AUWES
75
Outperform
AU$95.44B36.7130.35%2.45%3.04%3.65%
62
Neutral
$6.93B11.252.95%3.88%2.69%-24.71%
$25.28B23.0732.27%3.12%
$19.25B25.6530.87%3.18%
$4.35B15.139.58%4.58%
$2.45B13.5819.53%5.16%
AUSUL
73
Outperform
AU$3.22B14.2317.52%4.83%2.56%-13.62%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AU:WES
Wesfarmers Limited
84.60
20.12
31.20%
WOLWF
Woolworths Group Ltd
20.00
-0.57
-2.77%
CLEGF
Coles Group
14.00
6.62
89.70%
HNORF
Harvey Norman Holdings Ltd
3.56
0.72
25.35%
MCSHF
Metcash Limited
2.18
-0.26
-10.66%
AU:SUL
Super Retail Group Limited
14.34
2.04
16.59%

Wesfarmers Limited Corporate Events

Wesfarmers Raises EUR600 Million in Oversubscribed Eurobond Issuance
Jun 3, 2025

Wesfarmers Limited has successfully priced EUR600 million in seven-year senior unsecured notes, which will mature in June 2032. The issuance, under the company’s EUR 3 billion Euro Medium Term Note Programme, was heavily oversubscribed, reflecting strong investor demand in European and Asian markets. The proceeds, to be swapped into Australian dollars, will be used for general corporate purposes, taking advantage of favorable market conditions and diversifying the company’s debt maturity profile. The notes will be listed on the Singapore Exchange but not offered to retail investors in Australia.

The most recent analyst rating on (AU:WES) stock is a Hold with a A$69.00 price target. To see the full list of analyst forecasts on Wesfarmers Limited stock, see the AU:WES Stock Forecast page.

Leadership Transition at Officeworks: John Gualtieri to Succeed Sarah Hunter
Jun 2, 2025

Wesfarmers Limited announced a leadership transition at Officeworks, with Sarah Hunter stepping down as Managing Director in August 2025, to be succeeded by John Gualtieri, the current CEO of Kmart and Target. This transition is seen as a strategic move to leverage Gualtieri’s extensive retail experience to drive Officeworks’ next phase of growth, focusing on strengthening omnichannel customer experiences and expanding technology and business-to-business operations.

The most recent analyst rating on (AU:WES) stock is a Hold with a A$69.00 price target. To see the full list of analyst forecasts on Wesfarmers Limited stock, see the AU:WES Stock Forecast page.

Wesfarmers Unveils Strategic Vision at 2025 Briefing Day
May 21, 2025

Wesfarmers Limited announced its 2025 Strategy Briefing Day presentation, scheduled for 22 May 2025, which will be webcasted for broader accessibility. This event is expected to provide insights into the company’s strategic direction and operational plans, potentially impacting its market positioning and stakeholder engagement.

The most recent analyst rating on (AU:WES) stock is a Hold with a A$69.00 price target. To see the full list of analyst forecasts on Wesfarmers Limited stock, see the AU:WES Stock Forecast page.

Wesfarmers Appoints New Director Julie Ann Coates
May 1, 2025

Wesfarmers Limited has announced the appointment of Julie Ann Coates as a director. The initial director’s interest notice indicates that Coates holds 3,000 fully paid ordinary shares through Good Coates Pty Limited on behalf of the Good Coates Family. This appointment and shareholding disclosure are part of the company’s compliance with ASX listing rules, ensuring transparency and accountability in its governance practices.

Wesfarmers Director Increases Shareholding
Apr 17, 2025

Wesfarmers Limited announced a change in the director’s interest, with Friedrich (Tom) von Oertzen acquiring an additional 1,000 fully paid ordinary shares, bringing his total to 2,000 shares. This acquisition was conducted through an on-market trade, reflecting the director’s increased investment in the company, which may indicate confidence in Wesfarmers’ future performance and stability.

Wesfarmers Director Increases Shareholding
Apr 4, 2025

Wesfarmers Limited announced a change in the director’s interest, with Simon William (Bill) English acquiring 73 additional fully paid ordinary shares through the company’s Dividend Investment Plan. This change reflects a minor adjustment in the director’s shareholding, potentially indicating confidence in the company’s performance and future prospects.

Wesfarmers Hosts Bunnings Investor Briefing and Site Tour
Mar 26, 2025

Wesfarmers Limited announced an investor briefing and site tour for its subsidiary Bunnings, scheduled for March 27, 2025. This event, which will be webcast, reflects the company’s ongoing commitment to transparency and engagement with stakeholders, potentially impacting its market perception and investor relations positively.

Wesfarmers Sets Dividend Investment Plan Allocation Price for 2025
Mar 26, 2025

Wesfarmers Limited has announced the allocation price for its Dividend Investment Plan shares at $71.4337 for the interim dividend related to the six-month period ending December 31, 2024. This price was determined based on the average daily volume weighted average price of the company’s shares over a 15-day trading period. With 11.50% of shareholders opting to participate in the plan, shares are set to be issued on April 1, 2025, reflecting the company’s ongoing commitment to shareholder value.

Wesfarmers Updates Dividend Distribution Details
Mar 26, 2025

Wesfarmers Limited announced an update to its previous dividend distribution announcement, specifically regarding the Dividend Reinvestment Plan (DRP) price and participation details. The payment date for the dividend is set for April 1, 2025, with specific conditions for shares issued under the Key Executive Equity Performance Plan. This update reflects the company’s ongoing commitment to shareholder returns and provides clarity on the financial arrangements for stakeholders.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.