Own Wesfarmers (ASX:WES) shares? Here's what to look for during reporting season

Wesfarmers Ltd (ASX: WES) shares have been a very strong performers in 2021. Since the start of the year, the …

| More on:
Young man with laptop watching stocks and trends while thinking

Image Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Wesfarmers Ltd (ASX: WES) shares have been a very strong performers in 2021.

Since the start of the year, the conglomerate's shares have risen a sizeable 20%. This means Wesfarmers shares are now up 34% over the last 12 months.

Unsurprisingly, given these strong gains, expectations are high for Wesfarmers next month when it hands in its full year results.

In light of this, I thought I would take a look to see what the market is expecting from the retail giant.

Here's what to look for during reporting season

The market is expecting favourable trading conditions to lead to solid revenue and profit growth in FY 2021.

For example, according to a recent note out of Goldman Sachs, its analysts are expecting Wesfarmers to report full year revenue of $34,132.1 million. This will be a 10.6% increase on FY 2020's revenue.

In respect to earnings, the broker is forecasting a 9.6% increase in earnings before interest and tax (EBIT) to $3,508 million. This is expected to be driven largely by a 16.7% increase in Bunnings earnings to $2,268 million and a 30% jump in Department store earnings to $678 million.

Goldman expects this to lead to Wesfarmers declaring a full year dividend of $1.84 per share. Based on where Wesfarmers shares trade today, this will mean a 3% fully franked dividend yield.

Another thing that could be worth watching out for is commentary around its plan to acquire Australian Pharmaceutical Industries Ltd (ASX: API). If successful, management plans to create a new healthcare division.

Are Wesfarmers shares good value?

While Goldman Sachs currently has a buy rating on Wesfarmers shares, its price target of $59.70 has recently been surpassed. Based on this, it appears as though the market is expecting the company to outperform expectations in FY 2021.

Time will tell if that is the case, but all will be revealed in late August when Wesfarmers releases its results.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Aussie Broadband, Harvey Norman, HMC, and Web Travel shares are racing higher today

These shares are having a good time on hump day. But why?

Read more »

A man looking at his laptop and thinking.
Share Market News

What ASX 200 investors just learned about inflation and interest rates

Here’s what the ABS just reported.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Share Market News

Here's why this ASX pharmaceutical stock just rocketed 70%

This stock has achieved 'the most exciting' milestone of the year.

Read more »

three businessmen high five each other outside an office building with graphic images of graphs and metrics superimposed on the shot.
Broker Notes

3 ASX shares catching broker upgrades this week

Analysts are turning more constructive on these names.

Read more »

People sit in rollercoaster seats with expressions of fear, terror and exhilaration as it goes into a steep downward descent representing the Novonix share price in FY22
Opinions

Are you invested in ASX 'volcano' stocks?

ASX volcano stocks can be very volatile and sometimes exciting.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Technology Shares

Is the WiseTech share price heading for $200?

The path is set, according to one broker.

Read more »

Three women cruise along enjoying ice-creams in the sunshine.
Best Shares

3 ASX 300 stocks up by more than 300% in a year

These stocks certainly add up to a triple treat.

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Broker Notes

Goldman Sachs says these ASX 300 stocks can rise 15% to 30%

Let's see what the broker is saying about these buy-rated stocks.

Read more »