Wesfarmers Ltd (ASX: WES) shares are in the green today.
Shares in the S&P/ASX 200 Index (ASX: XJO) retail stock – whose subsidiaries include global household names like Bunnings Warehouse, Kmart Australia, Officeworks and Priceline – closed on Friday trading for $66.62. In afternoon trade on Monday, shares are changing hands for $67.02 apiece, up 0.6%.
As you can see on the chart below, that sees shares of the ASX 200 stock up more than 27% over the past 12 months.
This strong growth doesn't include the $1.98 in fully franked dividends Wesfarmers shares delivered over the year. If we add those back in, then the cumulative value of Wesfarmers stock is up just over 31% in a year, with some potential tax benefits from those franking credits.
But with that strong run behind it, Alto Capital's Tony Locantro says it may be wise to take some profits today (courtesy of The Bull).
Time to take some gains on Wesfarmers shares?
Locantro, who has a sell recommendation on Wesfarmers shares, notes that, "This industrial conglomerate has a diverse portfolio of quality businesses."
Turning to the company's FY 2024 growth metrics, he said:
WES generated revenue of $44.189 billion in fiscal year 2024, an increase of 1.5% on the prior corresponding period. Net profit after tax of $2.557 billion was up 3.7%. Hardware giant Bunnings Group grew total sales by 2.3%, while Kmart Group total sales were up 4.1%. Total sales at Officeworks grew by 2.3%.
So, why sell?
Well, Locantro expects that the year ahead could see consumers significantly tightening their discretionary spending belts.
"High interest rates and soaring cost of living increases present challenges in sustaining performance. It might be prudent to cash in some gains at these share price levels," he said.
What's been happening with the ASX 200 industrial conglomerate?
Wesfarmers shares edged up 0.4% on the day the company reported its FY 2024 results (29 August).
Atop the core financial metrics Locantro summarised above, the company achieved a 9.9% year on year increase in operating cash flow to $4.6 billion. The final dividend of $1.07 a share was up 3.9% from the FY 2023 final dividend.
Managing director Rob Scott noted that Wesfarmers shares performed strongly over the year despite ongoing challenging market conditions.
According to Scott:
We expected a challenging year and there were numerous headwinds to navigate with cost of living pressures, rising costs of doing business, subdued activity in residential construction and significant volatility in key commodities.
In this environment, our divisions maintained their focus on profitable growth and shareholder returns by delivering more value, choice and reliability to our consumer and commercial customers.
