Is the Wesfarmers Share Price Value at This Price? (ASX:WES)

At time of writing, the share price of Wesfarmers Ltd [ASX:WES] stands at $49.67, down a modest .5% today.

You can see the WES share price struggled to push past resistance (dating back to before the crash) in July, and is now threatening to push past further resistance at $49.50:

ASX WES - Wesfarmers Share Price Chart

Source: TradingView.com

What does this mean? What are their recent announcements telling us? And is it good value at this price? We answer these questions today.

WES share price reflects their diversified business model

Wesfarmers have an array of different businesses, each with their own strengths.

Their push up the charts past resistance may be heralding a shift in the macroeconomic picture for Australia.

You can see how each arm of the business performed below:

ASX WES Company Performance

Source: Wesfarmers Ltd

These are strong numbers, reflecting in part that their businesses were able to keep chugging along during lockdown in Victoria, while steaming ahead in other parts of the country.

The company notes that:

The government-mandated temporary closure of 38 Kmart stores and 32 Target stores in Melbourne impacted sales, partially offset by very strong online growth. Excluding metropolitan Melbourne stores, total sales growth of 12.1 per cent and 6.7 per cent was recorded for Kmart and Target respectively for the year to date. Digital capabilities within Kmart Group continue to expand and online penetration, excluding metropolitan Melbourne, of 7.8 per cent and 13.2 per cent was recorded for Kmart and Target respectively for the year to date.

So things could have been even better, and may improve now that Victoria is out of lockdown.

Outlook for Wesfarmers share price

Compared to say Woolworths, the WES share price may be more appealing in terms of value considerations purely based off its lower P/E.

For mature, large businesses these are a decent rule of thumb.

Then you can start to think about the macroeconomic picture.

No more panic buying on the one hand, and a population hungry for some retail therapy at say, Kmart.

All of this adds up to WES farmers potentially continuing further up the charts — remembering that their business are ingrained parts of Australian society.

But there may well be better dividend stocks out there than either of these two companies.

Check out Greg Canavan’s top five dividend stocks report to learn more.

Regards,

Lachlann Tierney
For The Rum Rebellion

 


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 


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