Forum Topics WES WES Business Model/Strategy

Pinned straw:

Added 5 months ago

Thought I'd search for a broker report on Murdoch's Factiva platform after Wesfarmer's 52 week high despite the competition watchdog eyeing Bunnings.

Only found one from JP Morgan written in May 24

Think it's a little too bearish?

When report mentions Kmart, Officeworks and Bunnings are the highest quality retail business, I think it is a buy regardless of the recommendation when you can't find anything out there that is comparable.

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mikebrisy
Added 5 months ago

@edgescape JP Morgan are relatively bearish on $WES compared with others.

15 covering brokers are at $59.73 ( range $43.00 - $$72.10),….so current SP is at top of the range.

Fwd P/E is 31.5x vs a 13 year average of 31.1.

Below is the front page of GS, who have moved from buy to neutral on recent SP strength. At a PT of $68.80 they are a relative bull. (You can access full report via CommSec).

While the FY result might reset both SP and brokers relative to each other, $WES is on my watchlist and I am not a buyer here.

That said, I don’t have my own view on its valuation nor whether the market is optimistic or pessimistic on the major business units.


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edgescape
Added 5 months ago

@mikebrisy

Watching the price action reminds me of the song Tubthumping (I Get Knocked Down).

It's up again despite being knocked down at open

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mikebrisy
Added 5 months ago

@edgescape Not sure why the market is so bullish compared with the "Professional Spreadsheet Jockeys".

It's one of the larger gaps in the last 5 years between SP and Consensus. On the previous two occasions, it took a pandemic (ealry 2020) and a result (Aug-2021) to bring it back "in line".

Are the analysts still generally cautious on retail? (No, for $NCK, $HVN, $AX1, $UNI, $APE ..... but yes for $JBH,... as a quick straw poll)

I'm not following $WES closely enough to have my own hypothesis. It's skill as a great capital allocator is hardly a secret.

Perhaps the next result will bring both lines back towards each other? Or ... ?

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