The Endeavour Group Ltd (ASX: EDV) share price dropped 8.2% for the month of August, with a closing price of $7.92 on the last day of July and a closing price of $7.27 on 31 August.
Shares of the alcohol retailer and hotels operator finished the session on Thursday at $7.46, up 2.61%. Earlier this morning, the shares made an intraday high of $7.49.
Endeavour shares experienced a stronger sell-off than many of their peers in the consumer staples sector last month.
That includes Woolworths Group Ltd (ASX: WOW), which lost only 3.81% and ended at a closing price of $36.09 on the last trading day of the month.
Meanwhile, Coles Group Ltd (ASX: COL) also reported a smaller loss than Endeavour Group at 6.35%, ending the month at a closing price of $17.56.
Overall, the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) lost only 2.65%.
There's a bull vs bear case for Endeavour going on in the broker community right now. The question is whether the shares are undervalued at their current level.
Let's take a look at what the experts have to say.
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Is Endeavour Group a bargain, or not?
Last Thursday, a note from Goldman Sachs suggested the Endeavour share price presents a "value entry point" for investors.
The broker gave Endeavour Group a price target of $8.10, representing a potential upside of 8.7% at the time of writing.
The broker said:
Despite the stock sell down on the back of results, our longer-term investment thesis for EDV does not change. We continue to see that EDV has one of the most loyal consumer bases in Retail (unique annual active users +15% YoY to 4.5mn in FY22) and improving VOC NPS. As the company continues to invest in consumer loyalty and digitalization, we expect that this will continue to drive mid-single digit sales growth in mix improvement together with cost efficiencies for margin expansion. We hence view the pull back in share price as a value entry point into a high quality and defensive player in AU Consumer.
Fat Prophets CEO Angus Geddes offered the opposite conclusion from his analysis, as reported by The Bull. Geddes noted that liquor sales and margins could be compressed by tighter household budgets.
Geddes said:
Australia's dominant liquor retailer and hotel operator offers defensive qualities. Group sales of $11.6 billion in fiscal year 2022 were flat year-on-year. Group earnings before interest and tax of $924 million represented a 2.8 per cent increase on the prior corresponding period. In our view, liquor sales and margins may be impacted by price increases as households tighten budgets. The company is trading above our valuation.
Endeavour Group share price snapshot
The Endeavour Group share price is up 10% year to date. By contrast, the S&P/ASX 200 Index (ASX: XJO) is down 9.8% over the same period.
The company's market capitalisation is $13.02 billion.
