Now that we've rolled into the new financial year, Westpac Banking Corp (ASX: WBC) shares continue to show strength.
Westpac was a standout on the ASX last financial year. In the last 12 months, its share price has surged by 30% and currently trades at $27.16.
Meanwhile, the S&P/ASX 200 index (ASX: XJO) has delivered single-digit returns in the same time. Westpac consequently outpaced the benchmark's return by a wide margin.
So, did you miss out by not buying Westpac shares in FY24? And what's in store for the bank moving forward? Here's a look.
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Westpac shares perform in FY24
Westpac shares gained in FY24 amid general market strength and positive reaction to its operating results.
The bank's half-year results in May showed a 16% decrease in net profit to $3.3 billion and a seven-basis-point contraction in net interest margin (NIM) to 1.9%.
Despite this year-over-year decline in income, investors weren't swayed.
They welcomed the 7.1% increase in the interim dividend to 75 cents per share, alongside a fully franked special dividend of 15 cents per share.
Westpac also authorised another $1 billion under its share buyback program.
These are shareholder-friendly moves that saw Westpac climb past its previous 52-week highs and climax at $27.89 apiece on 8 May. The banking stock has since pulled back from this mark.
What's in store for Westpac?
The bank has some big plans ahead. According to my colleague Tristan, Westpac's UNITE program is projected to cost an estimated $1.8 billion in FY24 and then $2 billion annually from FY25 to FY28.
It aims to improve customer service, increase shareholder returns, and "close the cost-to-income ratio gap to peers".
Analysts, meanwhile, hold diverse views on Westpac's FY25 outlook. While concerns persist about its exposure to the Australian housing market, others commend its strong capital position and proactive dividend policies.
Goldman Sachs maintains a neutral rating on Westpac shares with a $23.71 price target. The broker cites valuation concerns as its reasoning despite a favourable earnings outlook. Westpac currently trades at a price-to-earnings ratio (P/E) of 15 times.
Morgans also rates Westpac a hold, searching for a price target of $24.15 per share. Meanwhile, the consensus of analyst estimates rates it a sell, according to CommSec.
Key takeaways
Westpac shareholders finished FY24 with a smile after the stock's good performance. However, long-term investors are thinking beyond the year-to-year movements in a stock's price or the market in general.
The key is to think about what's to come instead of relying solely on historical performance. Historical performance is never a guarantee of future results.
As Warren Buffett puts it: "The investor of today does not get paid for yesterday's growth".
Westpac shares might have had a great run in FY24 – but you should never rely on past results and always conduct your own due diligence.
