Australian earnings preview – Wesfarmers


Full Year:

Wesfarmers Ltd (WES) is a conglomerate with broad business operations including home improvement and outdoor living, apparel and general merchandise, office supplies, and an industrials division with businesses in chemicals, energy, and fertilizers, and industrial and safety products. It reports its full-year numbers on the 20th of August.

Wesfarmers is well diversified to weather the coronavirus pandemic; its retail operations such as Bunnings and Officeworks have gone from strength to strength during the pandemic due to the working from home environment. On the other hand, its discount department stores Kmart and Target have struggled.

While the Victorian shutdown will continue to affect 168 stores in that state, it only impacts 17% of all Wesfarmers retails sales. Its online sales growth of 89% this calendar year from its retail stores and its specialty store Catch will provide significant offset.

Wesfarmers has a strong balance sheet, boosted by the successful sale of Coles last year which provides significant flexibility and support to the group's operating businesses. The consensus statutory EPS estimate is around 180 cents per share.

After suffering a ~35% fall during the Covid-19 crash, the share price of Wesfarmers recently traded to new all-time highs. Technically, the next layer of resistance comes from the big psychological round number at $50.00. While on the downside, dips over the past 6 weeks have been well supported towards $45.50.

Australian earnings preview – Wesfarmers

Source Tradingview. The figures stated areas of the 14th of August 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.