Wesfarmers Ltd (ASX: WES) was one of the most prominent blue-chip ASX 200 shares to report its latest earnings last week. It was a disappointment, if the market's reaction is to be believed. As it stands at the time of writing, Wesfarmers' stock remains down by just over 7% compared to where it closed last Wednesday, just before Wesfarmers released its half-year report.
As we covered at the time, there were a lot of green numbers in said report. For the six months to 31 December, the Bunnings, Kmart, and OfficeWorks owner revealed revenue growth of 3.1% to $24.21 billion. Earnings before interest and tax (EBIT) were up 8.4% to $2.49 billion, while net profit after tax (NPAT) climbed 9.3% to $1.6 billion.
That enabled Wesfarmers to increase its interim dividend to $1.02 per share (fully franked, of course), a 7.4% increase over the interim dividend investors received last year.
So, given Wesfarmers' solid numbers, as well as the negative stock price reaction for the market, many investors might be wondering whether now is a good time to buy into this ASX 200 blue-chip conglomerate.
Investors might have been surprised by the market's reaction to these earnings, given their underlying resilience.
However, the cause of the sell-off we've seen over the last few days draws our attention to Wesfarmers' valuation.
Is Wesfarmers stock cheap enough to buy yet?
Wesfarmers is unquestionably one of the highest-quality companies on the ASX. It has decades of history behind it as an ASX outperformer, with a long track record of delivering both capital growth and a rising dividend.
Further, its unique portfolio of assets, which range from the retailers mentioned above to pharmacies, chemical manufacturing, and mining, arguably makes Wesfarmers one of the most inherently diversified companies available to invest in on our market.
However, as the late, great Charlie Munger once said, "No matter how wonderful [a business] is, it's not worth an infinite price".
Sure, Wesfarmers has come off the boil, both over the past week, and since the stock hit a new record high of $95.18 a share back in mid-2025.
Even so, the company still trades on a price-to-earnings (P/E) ratio of 32.15. That's pretty lofty for a company that is growing at single digits. For comparison, this earnings multiple makes Wesfarmers more expensive than Microsoft, Facebook-owner Meta Platforms, and Google-owner Alphabet right now.
I love Wesfarmers as a company. I already own shares, but would love to own far more than I currently do. Saying all that, I just don't think the company is a good value at its current price, despite the recent sell-off. So I'll be holding out for a better price for Wesfarmers stock. I might be waiting a while, but that's the way it goes on the markets sometimes.
