Wesfarmers Limited

ASX:WES

Wesfarmers Limited

ASX:WES
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$85.06 (+0.3%)
Last close price
#141
Rank
4
Held by
22
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Reports (4) My Report Forum Investors
Forum Topics WES WES Industry/competitors

Pinned straw:
edgescape
Added 3 months ago

Even after all the market volatility, WES still trades neck and neck on a backward PE comparable to AMZN

From Yahoo Finance

WES trailing PE is 35x and forward PE is 28x

AMZN trailing PE is 36x and forward PE is 30x

AMZN no dividend but WES has dividend

AMZN is mainly ecommerce and cloud with worldwide operations. WES is bricks and mortar and industrial at national level.

Some theories why WES trades near a more desirable tech business such as AMZN

* Baby boomers sitting on huge capital gains who won't sell and farm the dividends instead till they pass away. Obviously once the baby boomer holder passes away, the beneficiaries that inherit the holding have to pay the CGT which is a win-lose situation.

* I heard on the forum from some old investors that it was good to buy buy WES when it dips/corrects down %5-10 even if it is above $60.

* More funds from overseas in AMZN so when the USD sneezes, AMZN will catch a cold

Anyway I should have listened to the old guy and bought WES at $65 and NOT wait till $55 as suggested here

[seeing this gravy train roll by]
Tom73
Added 3 months ago

Great reality check @edgescape, something you can do with similar results to most of the ASX50, we Aussies lover to pay a premium for anything that pays a dividend and our small market means it’s not as competitive for investment dollars than the US.

I was also sad to see WES go above $70 and not be holding, it’s a great company but everything has a price.

The only justification I see for WES having a high price/premium is that it’s basically a well run PE (Private Equity) firm. So despite most of it’s businesses being “bricks and mortar” it is not a permanent holder of those businesses. It’s business is buying businesses that are cheap or “fixer upers” and then selling them once they have done their job and they can get the right price.

I would never bet against WES at any price, unlike CBA which I have taken a short position because it’s at a bonkers price (even after the pull back) and it doesn’t have the capacity that WES has to make big changes to it’s business and re-rate on a fundamental basis.

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edgescape
Added 3 months ago

@Tom73

I think WES also is expanding their range of products sold at Kmart to the US (the Anko brand) as I was reading about this in a broker summary (can't remember). So I think that has something to do with the current valuation too.

Also the disposal of shares whether it be CBA or WES (as CBA has that issue where lots of holders not wanting to sell as they are sitting on lots of gains) and charging capital gains tax on beneficiaries once someone passes away is a bit unfair to be honest. Because the beneficiaries end up paying more tax due to their increase in taxable income.

The capital gain and the resulting tax should be charged from the final income of the year generated by the person that passed away in the estate I think but I can't comment because I'm not a tax accountant!

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