Down 20% in a year, what's next for Endeavour shares?

Times have been hard for this ASX 200 share. But could now be the time to invest?

| More on:
A group of friends sit at a table in a pub drinking beer and socialising

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

Endeavour Group Ltd (ASX: EDV) shares have been having a tough time of late.

This has led to the drinks company's shares losing over 20% of their value since this time last year, as you can see on the chart below.

Created with Highcharts 11.4.3Endeavour Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Why are Endeavour shares down so much?

Investors have been hitting the sell button over the last 12 months amid concerns over the impact that poker machine reforms could have on its operations.

In addition, a softer-than-expected third-quarter performance and higher finance costs appear to have disappointed the market in recent months.

Is this a buying opportunity?

The team at Goldman Sachs has taken all the above into account and continues to see significant value in Endeavour shares.

Its analysts currently have a buy rating and a $7.50 price target on them, which implies a potential upside of 22% for investors from current levels.

Sweetening the deal even further, Goldman expects dividend yields of 3.6% and 3.9% in FY 2023 and FY 2024, respectively.

Commenting on its earnings estimates, the broker said:

EPS cut -2.5% to -1.7% on higher interest rates though still ~8% EPS CAGR: Reflecting the above, we tweak FY23-25e group sales by 0.6-0.7% respectively and EBIT by +1.2%-1.3% largely due to higher than expected Hotels sales despite slightly lower 2H23 margins. Our updated forecasts imply 4.4% sales CAGR and 8.3% EPS CAGR FY22-25e.

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.

As for its valuation, the broker believes Endeavour shares are attractively priced at the current level. It adds:

Our TP of A$7.50/sh […] implies FY24e P/E of ~23x [now 19.1x] 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.

Should you invest $1,000 in Endeavour Group Limited right now?

Before you buy Endeavour Group Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Endeavour Group Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Consumer Staples & Discretionary Shares

After presenting at the 2025 Macquarie Conference, Macquarie tips 39% upside for this consumer discretionary stock

Is now the time to buy low on this penny stock?

Read more »

Couple look at a bottle of wine while trying to decide what to buy.
Consumer Staples & Discretionary Shares

Treasury Wine Estates shares down 21% this year amid resurgent China demand

Are Treasury Wine Estates shares a bargain?

Read more »

I young woman takes a bite out of a burrito n the street outside a Mexican fast-food establishment.
Consumer Staples & Discretionary Shares

Guzman Y Gomez shares are down 22% this year. Time to buy?

Should I buy the dip in Guzman Y Gomez shares?

Read more »

supermarket asx shares represented by shopping trolley in supermarket aisle
Dividend Investing

Should I buy Coles shares for their reliable passive income?

We take a look at Coles’ passive income credentials and the potential for share price gains.

Read more »

man looks at phone while disappointed
Consumer Staples & Discretionary Shares

Guess which ASX 300 stock is down 9% on guidance downgrade

Investors are rushing to the exits today. But why? Let's find out.

Read more »

Supermarket trolley with groceries going up the stairs with a rising red arrow.
Consumer Staples & Discretionary Shares

Woolworths shares have soared 18% since March. Here's how much upside Macquarie still expects

Having raced higher since March’s multi-year lows, just how high can Woolworths shares go?

Read more »

A customer and shopper at the checkout of a supermarket.
Consumer Staples & Discretionary Shares

Broker watch: Are Woolworths shares a buy?

Do analysts think this supermarket giant would be a good pick for investors? Let's find out.

Read more »

Supermarket trolley with groceries on top of a red pointing arrow.
Consumer Staples & Discretionary Shares

Up 31% in a year, just how much more upside does Macquarie tip for Coles shares?

Can Coles shares smash the ASX 200 returns again in the year ahead?

Read more »