Wesfarmers Ltd (ASX: WES) shares are up 1.71% on Friday to $70.40 per share.
The market's biggest consumer discretionary share has had a magnificent run over the past 12 months.
Let's see what $10,000 invested in Wesfarmers shares a year ago would be worth today.
$10,000 invested in Wesfarmers shares
This time last year, Wesfarmers shares were trading for $53.71 apiece.
So, $10,000 of capital (less a $5 brokerage fee) would have purchased 186 shares in the conglomerate, with about $10 left over.
Today, Wesfarmers shares are worth $70.40, so each share has gained $16.69 in value.
So, all up, there's been a capital uplift of $3,104, taking the initial $9,990 investment to $13,094.
This means a nice capital gain of 31%, which is vastly superior to the benchmark S&P/ASX 200 Index (ASX: XJO). By comparison, the ASX 200 has gained 10.5% in value over the past 12 months to date.
What about dividends?
In addition to that 31% capital gain, there have been two dividend declarations over the 12 months.
Last week, during earnings season, Wesfarmers declared a final dividend for FY24 of $1.07 per share plus 100% franking. That dividend will be paid on 9 October.
The company also paid an interim dividend for FY24 of 91 cents per share plus 100% franking in March.
That's a total of $368 in passive income (plus franking) on top of that $3,104 capital gain, or a total return of almost 35%.
Should you buy Wesfarmers shares today?
Goldman Sachs has a neutral rating on Wesfarmers shares with a 12-month price target of $66.60. This implies a potential 5.7% downside from today's share price.
The broker reiterated its rating following the company's FY24 results released last month.
The consensus rating among analysts on CommSec is a moderate sell. They forecast Wesfarmers to increase its earnings per share (EPS) from $2.26 in FY24 to $2.39 in FY25 and $2.63 in FY26.
They also predict Wesfarmers dividends to increase from $1.98 per share in FY24 to $2.09 per share in FY25 and $2.31 per share in FY26.
According to CBA data, Wesfarmers shares are trading on a price-to-earnings (P/E) ratio of 30.11x.
What did Goldman think of Wesfarmers' FY24 report?
Wesfarmers reported a 1.5% increase in revenue in FY24 to $44.2 billion and a 3.7% lift in net profit to $2.56 billion. Operating cash flows were up 9.9% to $4.6 billion.
Goldman noted three key takeaways from the earnings call with Wesfarmers management.
Firstly, Goldman said Bunnings' store growth was muted in FY24, and the FY25 capex guide of $1.1 billion to $1.3 billion is modest. Management said the key drivers of growth in FY25 would include store space optimisation and sales productivity in introducing higher turn categories, such as pets, cleaning, and auto.
Secondly, Kmart was the standout in FY24, with EBIT margin expanding 140bps to 9.4%. Goldman expects further expansion to 9.9% (+50 bps) with annualisation of cost optimisation benefits.
Lastly, the health division and Officeworks businesses look promising but will take time to scale up.
