Endeavour share price lifts amid plan for 10% shareholder returns per year from FY26

Endeavour conducted an investor presentation day on Wednesday.

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The Endeavour Group Ltd (ASX: EDV) share price is 2.76% higher at $5.22 amid management revealing plans to deliver 10%-plus per annum returns for shareholders from FY26.

Let's take a look at the details.

Endeavour share price higher as company lays out strategy

At an investor presentation today, Endeavour Group CEO Steve Donohue said they would strive for 10%-plus returns via high single-digit earnings per share (EPS) growth and a 70%-75% dividend payout ratio.

The company is promising to expand return on funds employed (ROFE) year-on-year along with a cash conversion ratio of 90%-110%, which will enable funding of recurring capital and dividends from free cash flow.

The Endeavour board has been under immense pressure amid a dramatic fall in the share price in 2023.

Major shareholder Bruce Mathieson Senior has previously said the company needs "fundamental changes" amid an unacceptable fall in the Endeavour share price.

He even called for chair Peter Hearl to resign, saying he has "no idea" how to run a successful business and needs to go to "give this company a fighting chance at recovery".

At the AGM on 31 October, Hearl said many of Mathieson's observations are reflected in the company's turnaround plan.

Hearl said:

Many of the observations of The Bruce Mathieson Group, and some others, are reflected in our strategic focus going forward — including the importance of sales momentum in our retail businesses, cost discipline across the Group, lifting capital returns in hotels, and more transparency in relation to capital management …

The Endeavour share price hit an all-time low of $4.76 on 14 November.

This represented a fall of just over 30% in 2023 alone.

But the stock is receiving a lot of broker support at the moment.

A slew of brokers say buy Endeavour shares

Catapult Wealth portfolio manager Tim Haselum said downside risk is priced in and the stock presents "decent value".

Haselum told The Bull:

The company delivered sales growth in retail and hotels in the first quarter of fiscal year 2024.

A weaker Australian dollar and softer share price could see overseas investors start to show some interest in Endeavour.

UBS has upgraded Endeavour shares to a buy rating with an improved price target of $6.

Goldman Sachs has a conviction buy rating on Endeavour with a 12-month price target of $6.40. The broker says the stock is cheap and offers the "most attractive valuation amongst Staples peers".

CLSA has upgraded its rating on Endeavour to accumulate with a share price target of $5.25.

JP Morgan gives Endeavour a buy rating with a price target of $5.90.

Jeffries is the most bullish of them all, with a $6.50 share price target and a buy rating.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and JPMorgan Chase. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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