Endeavour Group Ltd (ASX: EDV) shares have been having a tough time recently.
This saw the drinks giant's shares hit a 52-week low of $5.90 yesterday, stretching their 12-month decline to 18%.
Investors may now be wondering if this weakness is a buying opportunity. So, let's find out!
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Is it time to buy Endeavour shares?
According to a recent note out of Goldman Sachs, its analysts see a lot of value in Endeavour shares at present.
Goldman currently has a buy rating and $7.50 price target on its shares, which implies potential upside of 27% over the next 12 months.
In addition, the broker is forecasting fully franked dividends of 22 cents per share in FY 2023 and 25 cents in FY 2024. This will mean yields of 3.7% and 4.2%, respectively.
What did the broker say?
Goldman highlights that Endeavour's shares are trading at a meaningful discount to the rest of its consumer coverage.
And given the company's positive outlook for sales and earnings in the coming years, it feels this makes it a great time to buy. It said:
Our updated forecasts imply 4.4% sales CAGR and 8.3% EPS CAGR FY22-25e. Our valuation of 50/50 SOTP/DCF is unchanged. We reduce our Hotel EV/EBIT multiple from 13x to 12x to factor in further operational volatility and potentially lower contribution from gaming operations which have higher margins, despite immediate NSW cashless gaming risk being reduced given the Labor government win in March. Our retail valuation multiple is unchanged at 19x. Net net, our new TP of A$7.50/sh (from A$7.80/sh) implies FY24e P/E of ~23x vs historical average of ~24x. The stock is currently trading at ~20x P/E implying 2.4x PEG which remains attractive relative to the rest of our Consumer coverage.
