The Wesfarmers Ltd (ASX: WES) share price has delivered a pleasing performance over the years, rising by around 35% in the last five years, as the chart below shows. In February – before the Iran war – the Wesfarmers share price was up 57% over five years.
The company is best-known as the owner of Kmart, Bunnings and Officeworks, which are three of the leading retailers in Australia.
Wesfarmers may well be able to capture more market share in the current market because its core businesses of Bunnings and Kmart are leaders on value and can help with any pressure on household budgets in the coming period.
The Wesfarmers share price has dropped back recently, so it's interesting to see what analysts think of the company's future.
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Expert projections for the retailer
According to CMC Invest, of eight analyst ratings within the last three months, there has been one buy rating, four hold ratings and three sell ratings.
The average price target of those eight ratings is $78.68, suggesting a possible rise of around 5% from where it is at the time of rating. A price target tells us where analysts think the share price will be in 12 months from the time of that investment call.
The most optimistic price target of those eight recent ratings is $92.34. That suggests a potential rise of 23% from where it is at the time of writing.
But, there are also negative views on where the Wesfarmers share price could go. The most pessimistic price target is $69.26, implying a decline of more than 7% in the year ahead.
So, while there is a spread of confidence, on average analysts are still leading towards positive capital growth in the year ahead (plus dividend payments).
Why is this a good time to consider the Wesfarmers share price?
The company has great tailwinds to deliver earnings growth in the long-term, with excellent returns on capital (ROC) across Kmart Group and Bunnings Group and expansion in areas like healthcare, lithium mining and international sales of Anko products.
Wesfarmers is expected to generate earnings per share (EPS) of $2.50 in FY26, putting it at 30x FY26's estimated earnings, according to CMC Invest.
The business is projected to see EPS growth of close to 10% in FY27 to $2.74. EPS is forecast to rise again in FY28 to $2.98 in FY28.That means the current Wesfarmers share price is valued at 25x FY28's estimated earnings, according to the projection on CMC Invest.
