Endeavour Group Ltd (ASX: EDV) shares could be good value for income investors after falling 17% from their highs.
That's the view of analysts at Bell Potter, who are feeling relatively upbeat on the ASX 200 stock.
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What is the broker saying about this ASX 200 stock?
Bell Potter notes that the Dan Murphy's and BWS owner released a trading update this week. And while that update revealed profits below expectations, the broker was pleased to see improvements in its sales. It said:
EDV has provided a trading update for 1H26e. EDV expects to report Group EBIT of between $555-566m, down 5.9% at the midpoint and a 5.6%/7.1% miss on VA consensus and BPe, respectively. The weaker than expected result reflected a lower Retail gross profit margin (85bps lower vs. 1H25a) which was only partially offset by improving Retail sales momentum.
With increased promotional activity and cycling of supply chain impacted comps, Retail sales momentum improved in 2Q26 with Dan Murphy's and BWS sales growing 2.2% YoY.
Pricing reset
The broker also highlights that the ASX 200 stock's sales growth was underpinned by a pricing reset to reinforce its customer value proposition. It believes this will support top line growth, though it will mean consensus downgrades to margins. It adds:
This pricing reset will likely see heavy consensus downgrades in FY26e and beyond. EDV implemented the changes to reinforce its customer value proposition across both of its brands, in hopes of reigniting top-line growth. We believe a sharpening focus on bringing value to customers leans into EDV's competitive advantage and are thus supportive of the strategy, however, we would like to see management articulate its planned execution before upgrading our sales forecasts.
Time to buy
According to the note, the broker has retained its buy rating on the ASX 200 stock with a trimmed price target of $4.00 (from $4.30). Based on its current share price of $3.78, this implies potential upside of 6% for investors.
In addition, it is forecasting dividends of 15 cents per share in FY 2026 and then 19 cents per share in FY 2027. This represents 4% and 5% dividend yields, respectively.
This boosts the total potential return on offer with this ASX 200 stock to approximately 10%.
Commenting on its buy recommendation, Bell Potter said:
We retain our Buy rating and lower our TP to $4.00. With a key negative catalyst now digested by the market (Retail gross margin reset), we can now look ahead to the strategy refresh where we believe expectations remain low (however, have improved given today's muted market reaction) and therefore presents upside surprise potential. The key risk to our thesis is a further reset in earnings following the strategy refresh.
