Endeavour Group Ltd (ASX: EDV) is an alcoholic beverages retailer, hotel operator, and poker machines operator, which spun off from Woolworths Group Ltd (ASX: WOW) in 2021.
It is the owner of the Dan Murphy's and BWS bottle shop chains.
Endeavour Group shares closed at $4.20 a share last week. However they dipped significantly yesterday, closing 1.43% lower following FY25 results.
Key results included:
- Earnings before interest and tax (EBIT) fell 7.3%
- Statutory EBIT was down 11%
- $12.1 billion in sales revenue which was a fall of 0.3% compared to the 2024 financial year.
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Bell Potter updates guidance
The team at Bell Potter released a report on Endeavour Group yesterday following the earnings results news.
While they see potential upside to FY26 retail revenue forecasts if liquor spending increases under improved economic conditions, several factors are likely to weigh on the stock.
We see upside to FY26e VA consensus Retail revenue estimates if liquor spending growth picks up due to improved conditions. However, the competitive threat presented by lower prices at Liquorland suggests margins are likely to be pressured in FY26e.
Despite the stock trading at historically low valuation multiples (12x EBIT and 15x PE), Bell Potter considers this justified.
This view is based on ongoing gross margin pressures, persistent wage inflation, a forthcoming change in management that may result in strategic shifts, and the potential for stricter regulations in the electronic gaming machine (EGM) space.
On the positive side, a key potential catalyst for the stock is the outcome of a strategic refresh, which may include the separation of the Retail and Hotels businesses – a move that could unlock shareholder value.
The broker also said a full strategy refresh is underway, with outcomes to be revealed in 2H26 following the arrival of new CEO Jayne Hrdlicka.
Is there upside for Endeavour Group shares?
Bell Potter has maintained a "Hold" rating on Endeavour Group (ASX: EDV) with a target price of $4.55 per share.
Despite the cautious view, the price target does indicate some upside.
From yesterday's closing price of $4.14, this indicates an upside of almost 10% for Endeavour Group shares.
This price target indicates the broker is slightly more optimistic compared to other estimates.
Online brokerage platform Selfwealth lists the stock as undervalued by 5.1%, while TradingView has a one year price target of $4.44 which indicates approximately 7.19% upside.
