Should You Buy Wesfarmers Limited (ASX: WES) After Its Latest Earnings?

Wesfarmers Limited (ASX: WES) is one of Australia’s most iconic conglomerates, known for its diversified portfolio spanning retail, industrials, chemicals, and an increasingly promising health division. With household brands like Bunnings, Kmart, Target, and Officeworks, it has long been viewed as a cornerstone of stability in many Australian portfolios.

Following its latest full-year earnings for FY25, Wesfarmers has once again proven its operational strength and resilience in a challenging consumer environment. But with shares trading near record highs, investors are asking the big question: is now the right time to buy?

Robust Profit Growth and Earnings Momentum

Wesfarmers’ FY25 results showcased impressive performance and disciplined execution across its divisions. Despite a tough retail climate, the company delivered solid revenue and profit growth.

Key highlights from FY25 include:

1. Revenue: $45.6 billion, up 3.47% year-on-year.
2. Statutory NPAT: $2.93 billion, an impressive 14.4% increase from FY24.
3. Underlying NPAT: $2.65 billion, up 3.8%, after excluding one-off items.
4. Earnings per share (EPS): $2.58.
5. Dividend: $2.06 per share, including a fully franked final dividend of $1.11 and a proposed $1.50 special capital return pending shareholder approval.

This consistent performance underscores Wesfarmers’ ability to generate profits even when economic conditions are mixed. The standout performers were once again Bunnings and Kmart, which managed to grow both sales and margins, helping to offset weakness in Catch Group and other smaller divisions.

Inside the Latest Earnings: The Positives

1. Outperforming the Market

Wesfarmers’ share price has been on a strong run, rallying around 25–27% in 2025, outperforming the S&P/ASX 200 Index by more than double. The company’s ability to deliver consistent earnings growth and attractive dividends has made it a go-to choice for investors seeking both stability and returns.

2. Reliable Dividend Story

Wesfarmers continues to stand out for its shareholder-friendly capital management. With a dividend yield of over 2.2% (excluding potential specials), the company remains one of the ASX’s most dependable income stocks. The combination of ordinary dividends and special payouts highlights strong cash generation and a healthy balance sheet.

3. Strong Financial Position

The company’s balance sheet remains a fortress. Net debt is comfortably within target levels, supported by strong operating cash flow and disciplined capital allocation. This gives Wesfarmers ample flexibility to invest in new opportunities while rewarding shareholders.

4. Retail Resilience

Even with household budgets under pressure, Bunnings, Kmart, and Officeworks delivered solid performances.

1. Bunnings benefited from steady trade demand and DIY activity, with growth in tools, garden, and hardware segments.
2. Kmart Group (including Target) maintained margin discipline and improved efficiency, driving robust profitability.
3. Officeworks saw moderate growth as corporate and education spending stabilised post-COVID.

Easing inflation and lower interest rates helped lift consumer sentiment late in the year, supporting discretionary purchases.

5. Emerging Growth in Health and Digital

Wesfarmers’ Health division—which includes Priceline, Clear Skincare, and its growing pharmaceutical distribution business—continues to expand. The segment’s performance was slightly ahead of expectations, driven by network growth and improved operating leverage.

Management is also prioritising digital transformation and data-driven retail strategies to enhance customer experience and supply chain efficiency—moves that position Wesfarmers well for the future.

Key Risks and What to Watch For

While Wesfarmers’ fundamentals remain solid, there are a few factors investors should keep in mind.

1. Premium Valuation

WES currently trades at a price-to-earnings (PE) ratio near 35, with a forward PE of around 37—well above the ASX 200 average of 18–20. This premium reflects investor confidence, but it also means expectations are high. Even minor disappointments could trigger short-term pullbacks. Analysts’ price targets range widely, from $73 to $100, reflecting both optimism and caution.

2. Slowing Momentum in Some Retail Segments

Although retail sales remain steady, certain discretionary categories—especially at Target and Catch Group—have shown signs of softness. Catch, in particular, continued to post losses and remains a drag on group performance.

3. Consumer and Cost Pressures

While inflation has eased, consumer spending remains sensitive to cost-of-living pressures. Rising wages and logistics costs could also weigh on margins if not managed carefully. However, the recent improvement in household confidence offers some offsetting tailwinds.

4. High Comparables Ahead

After such strong performance in FY25, maintaining double-digit growth in FY26 may prove challenging. Investors should expect more modest earnings growth in the near term as the company invests in its next phase of expansion.

Analyst and Market Outlook

Broker sentiment toward Wesfarmers remains mostly positive but balanced. Analysts at major firms such as Morgan Stanley and Macquarie have highlighted the group’s defensive qualities and superior management, but note that valuation leaves little room for error.

Consensus estimates suggest mid-single-digit earnings growth over the next two years—steady but not spectacular. That said, the long-term structural advantages of its retail network and scale make it a consistent compounder in most market environments.

In short: Wesfarmers may not be the fastest-growing stock on the ASX, but it continues to be one of the most reliable.

Verdict: Is WES a Buy Now?

Wesfarmers’ FY25 earnings reaffirm its reputation as one of Australia’s best-run companies. With diversified earnings streams, disciplined management, and a clear focus on shareholder returns, it remains a cornerstone blue-chip holding for many investors.

However, valuation is the sticking point. At current levels, much of the optimism is already priced in. For short-term traders, the risk-reward balance might look stretched after such a strong rally. But for long-term investors, the story remains compelling.

Final Takeaway

Wesfarmers’ latest earnings prove that consistency still pays in a volatile market. While not the cheapest stock on the ASX, its combination of stability, scale, and shareholder rewards makes it an attractive anchor for any portfolio. For patient investors willing

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