Wesfarmers Ltd (ASX: WES) has just released its interim results which show a 4% rise in revenues from continuing operations for the half year ending 31 December 2014. The adjusted (continuing operations) numbers provide a better comparison due to the sale of the insurance division, which contributed significant earnings to the group in the previous corresponding period (pcp).
Here are the key financial highlights from the results:
- Operating revenue increased 4% to $31.97 billion
- Net profit after tax jumped 8.3% to $1.376 billion
- Earnings per share expanded by 9.6% to 120.7 cents per share (cps)
- Return on equity improved by 77 basis points to 10.4%
- The interim dividend has been increased by 4.7% to 89 cps
Helping to drive Wesfarmers' results higher was an impressive Coles division which grew earnings during the half by 7.1% on the back of a 2.8% rise in sales. Kmart also excelled with sales and earnings up 5.3% and 11.2% respectively. Once again however the standout performer of the conglomerate was Bunnings, which achieved 11.9% sales growth and 10% earnings growth.
Overall, the results from the retail businesses were very good and could bode well for Woolworths Limited (ASX: WOW) which is due to report on 27 February.
Time to buy?
Wesfarmers' shares will trade ex-dividend on 24 February which gives investors a few days to jump in if they choose. Payment of the dividend is scheduled for 2 April.
In early trade the share price has slipped 2.3% to $44.85, with little in the way of concrete guidance from management, assuming a second half in line with the first half (which is above consensus estimates provided by Thomson Reuters research) the stock is trading on a price-to-earnings ratio of 18.6x.
That would appear to be a full price to pay for this blue-chip stock, however, a prospective fully franked dividend yield of 4.7% is bound to entice some.
