The Wesfarmers Ltd (ASX: WES) share price will be under the spotlight in August as the company reports its FY23 result. It’s due to reveal the numbers on 25 August 2023.
As one of the largest retailers in Australia, the market will be paying close attention to how things are going for businesses like Bunnings and Kmart.
What is the retailer expected to report?
According to Commsec, the business is expected to report that it generated earnings per share (EPS) of $2.17 and pay an annual dividend per share of $1.86.
If that’s what happens, it will be valued at 23 times FY23’s estimated earnings with a forecast grossed-up dividend yield of 5.3%.
That’s not the only estimate out there of course. According to Commsec, Goldman Sachs has forecast that Wesfarmers will generate $2.15 of EPS and pay an annual dividend per share of $1.83.
Whatever the company ends up generating, it’s expected to report profit growth, which is a good sign because I believe that’s the main thing that will support the Wesfarmers share price to go higher over time.
My positive outlook
It’s impossible to say what a share price is going to do, particularly in a short timeframe like a month, but I’m confident about the company’s long-term outlook.
Some investors may be surprised that retailers’ share prices have done as well as they have in recent times following all of the interest rate rises and inflation.
It may yet be shown that the market was too positive on the situation – if retailers do fall then I’d suggest the Wesfarmers share price is a great opportunity.
There are few retailers in Australia that generate returns (on capital) like how Bunnings and Kmart do.
Not many ASX shares are growing rapidly into the healthcare space, particularly digital health. Wesfarmers is expanding in this sector which has strong tailwinds, so I’m looking forward to hearing more about its progress and plans for the healthcare division.
I’d also like to hear more from the company about the progress and possible profitability of the Mt Holland lithium project because it could add a lot to Wesfarmers’ earnings.
One of the main reasons that I think Wesfarmers can do well during this uncertain period is because Kmart and Bunnings are two of the leading retailers, and they seem capable of capturing market share because of their focus on offering value to customers. If those businesses are able to provide relatively positive outlooks, then that could be key for Wesfarmers’ profit remaining resilient.
Longer-term profit growth expected
We don’t know what the company is going to report, but in FY25 the company’s EPS could jump to $2.51 according to Commsec, which would be supportive for the Wesfarmers share price.
Over the next two years, I believe Wesfarmers’ earnings can continue to rise as its business segments grow, partially due to Australia’s rising population. Hence, this could be very helpful for the Wesfarmers share price.
