Wesfarmers Limited
Wesfarmers Limited Fundamental Analysis
Wesfarmers Limited (WES.AX) shows moderate financial fundamentals with a PE ratio of 27.00, profit margin of 6.62%, and ROE of 35.93%. The company generates $46.3B in annual revenue with moderate year-over-year growth of 3.47%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 38.3/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze WES.AX's fundamental strength across five key dimensions:
Efficiency Score
ExcellentWES.AX demonstrates superior asset utilization.
Valuation Score
WeakWES.AX trades at a premium to fair value.
Growth Score
ModerateWES.AX shows steady but slowing expansion.
Financial Health Score
ModerateWES.AX shows balanced financial health with some risks.
Profitability Score
ModerateWES.AX maintains healthy but balanced margins.
Key Financial Metrics
Is WES.AX Expensive or Cheap?
P/E Ratio
WES.AX trades at 27.00 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, WES.AX's PEG of 5.81 indicates potential overvaluation.
Price to Book
The market values Wesfarmers Limited at 10.52 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 10.64 times EBITDA. This signals the market has high growth expectations.
How Well Does WES.AX Make Money?
Net Profit Margin
For every $100 in sales, Wesfarmers Limited keeps $6.62 as profit after all expenses.
Operating Margin
Core operations generate 8.52 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $35.93 in profit for every $100 of shareholder equity.
ROA
Wesfarmers Limited generates $10.61 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Wesfarmers Limited generates limited operating cash flow of $4.49B, signaling weaker underlying cash strength.
Free Cash Flow
Wesfarmers Limited produces free cash flow of $3.32B, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $2.92 in free cash annually.
FCF Yield
WES.AX converts 4.00% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
27.002
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
5.81
vs 25 benchmark
P/B Ratio
Price to book value ratio
10.52
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.79
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
2.37
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.10
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.36
vs 25 benchmark
ROA
Return on assets percentage
0.11
vs 25 benchmark
ROCE
Return on capital employed
0.20
vs 25 benchmark
How WES.AX Stacks Against Its Sector Peers
| Metric | WES.AX Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 27.00 | 23.86 | Worse (Expensive) |
| ROE | 35.93% | 1107.00% | Weak |
| Net Margin | 6.62% | -612.00% (disorted) | Weak |
| Debt/Equity | 2.37 | 0.72 | Weak (High Leverage) |
| Current Ratio | 1.10 | 2.66 | Neutral |
| ROA | 10.61% | -30467.00% (disorted) | Strong |
WES.AX outperforms its industry in 1 out of 6 key metrics, particularly excelling in ROA, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Wesfarmers Limited's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
47.81%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
71.97%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
0.22%
Industry Style: Cyclical, Growth, Discretionary
Growing