Why has the Endeavour share price gone nowhere this month?

It’s been a slow start for Endeavour since debuting on the ASX last month.

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Man drinking from a bottle sitting on a floating ring in the middle of a harbour going nowhere.

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The Endeavour Group Ltd (ASX: EDV) share price is doing a whole lot of not much today. At the time of writing, Endeavour shares are up 0.48% to $6.31 a share. But doing a whole lot of not much is what investors in this new ASX 50 share would be used to by now.

Endeavour Group used to be the liquor division of Woolworths Group Ltd (ASX: WOW). It owns the dominant bottle shop chains BWS and Dan Murphy’s, as well as a series of pubs and hotels. Last month, Endeavour flew the Woolworths nest as part of an ASX demerger. The company was spun off in its own right, with existing Woolworths shareholders receiving one Endeavour share for every one Woolworths share owned.

Since its official ASX debut on 24 June, the Endeavour share price hasn’t exactly made waves. In fact, as it currently stands, the Endeavour share price is sitting pretty much at the same level it was at at the start of July. That stands in contrast to the S&P/ASX 200 Index (ASX: XJO), which has managed to add roughly 1.3% since the start of this month.

So why is the Endeavour share price so sluggish?

Endeavour share price fails to excite in July

Perhaps we can point to the recent but dramatic escalation of the New South Wales coronavirus crisis as a possible reason. These lockdowns have the potential to significantly increase running costs for retailers. Responsibilities like QR code check-ins, regular deep cleaning of stores, and store capacity restrictions certainly don’t make life easier (or cheaper) for retail companies like Endeavour.

Another factor that could be at play is the very nature of Endeavour’s business. As we’ve discussed before on the Fool, Endeavour is not exactly the kind of company that jumps to mind when someone mentions ESG (ethical, social and corporate governance) or ‘ethical investing’. That’s what you can expect from a company that trades in one of our most popular vices – alcohol.

This could well lead to permanent exclusion from exchange-traded funds (ETFs) or other investment vehicles like managed funds that follow an ESG mandate. Since Endeavour has yet to release any earnings numbers on its own steam, we can’t yet accurately analyse the kind of price-to-earnings (P/E) ratio its shares are currently trading on.

But it’s very possible that Endeavour will not be able to command the same kinds of P/E multiples that Woolworths or Coles Group Ltd (ASX: COL) can for this reason.

At the current Endeavour share price, the company has a market capitalisation of $11.3 billion.

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

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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