The Wesfarmers Ltd (ASX: WES) share price has fallen 18% year to date, but is it a good time to buy?
The company's shares climbed 0.88% on Wednesday to finish at $48.38. For perspective, the S&P/ASX 200 Index (ASX: XJO) edged just 0.3% higher today.
Let's check the outlook for Wesfarmers.
'Good entry point'
The team at Morgans recommend Wesfarmers shares as a buy with a $58.50 price target. This is nearly 20% more than the current share price.
Morgans is impressed with the company's highly regarded management team and healthy balance sheet. Their analysts said Wesfarmers holds one of the "highest quality" retail portfolios in Australia.
They added:
While COVID-related staff shortages are a challenge, the core Bunnings division remains a solid performer as consumers continue to invest in their homes.
We see the recent pullback in the share price as a good entry point for longer term investors.
Morgans is also predicting a dividend of $1.62 per share in the 2022 financial year. That's a forward dividend yield of 3.34% for ASX investors who bought Wesfarmers shares at or near their closing price today. And don't forget the 100% franking on top.
For FY2023, Morgans anticipates a dividend of $1.81 per share.
The company owns Target, OfficeWorks, Kmart and Bunnings. Recently, Wesfarmers acquired Australian Pharmaceutical Industries.
Wesfarmers share price snapshot
Wesfarmers shares have gravitated 12.15% lower in the past year. They have fallen 2.7% in a month. For some ASX investors, this may present an opportunity to 'buy the dip'.
For perspective, the S&P/ASX 200 index has returned 6.5% in the past year.
Wesfarmers has a market capitalisation of $54.39 billion based on its current share price.
