The Wesfarmers Ltd (ASX: WES) share price is down 19% from its February peak, as the chart below shows. Experts have given their view on where the business valuation could go next.
Wesfarmers is a very impressive retail company with a number of leading businesses including Kmart, Bunnings, Officeworks, Priceline and Target.
Let's take a look at where experts think the Wesfarmers share price could go from here.
Image source: Getty Images
Are capital gains likely?
No-one has a crystal ball to reveal what's going to happen next.
But, some brokers/analysts issue price targets, suggesting where they think the share price will go over the next 12 months.
According to CMC Invest, of eight recent ratings on the business, the average price target is $76.93, which suggests a potential gain of 6% from where it is.
The most optimistic price target is $92.31, suggesting a possible rise of 27%. If it did rise that much, I imagine it would outperform the S&P/ASX 200 Index (ASX: XJO) quite convincingly.
Why could the Wesfarmers share price rise?
The business generates its earnings from a number of sources, but some of the main profit generators could see a step-up in earnings over the next couple of years.
For example, lithium prices have jumped in recent months, amid the significant volatility of fuel prices and availability, with electric vehicles and batteries looking a lot more appealing. This bodes well for Wesfarmers' investment in lithium mining.
It's true that interest rates and inflation are higher, which may impact household spending. However, Kmart and Bunnings famously aim to give customers great value, which could be very attractive for customers during this upcoming period. I'm expecting these businesses to gain market share over the next year, as they did during the 2022 to 2024 period of higher inflation.
When the company did announce its FY26 half-year result, it did indicate that its main businesses had achieved revenue growth in the early part of the FY26 second half. Ongoing growth is a pleasing sign.
I'm also a fan of the company's WesCEF (chemicals, energy and fertilisers) business, which offers Wesfarmers the ability to grow earnings across a diversified array of sectors, with fertilisers being one area I've got my eyes on during this period.
According to the forecast on Commsec, the Wesfarmers share price is valued at under 29x FY26's estimated earnings.
It's not cheap, hence the relatively muted price targets, but I think it's still a solid option for the long-term at the current Wesfarmers share price.
