Wesfarmers Ltd (ASX: WES) shares have fallen a long way from their highs.
On Tuesday, the ASX 200 blue chip hit a 52-week low of $70.87 before closing at $71.30.
That means Wesfarmers shares are now down around 25% from their 52-week high of $95.18.
For a business of this quality, I think that is worth paying attention to.
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A lower price for a high-quality business
Wesfarmers is rarely a share that looks obviously cheap.
The market usually places a premium valuation on the company because it owns some of Australia's strongest retail brands and has a long history of disciplined capital management.
According to CommSec, consensus estimates point to earnings per share of $2.55 in FY26 and $2.74 in FY27. Based on the latest share price, that means Wesfarmers is trading on around 26 times estimated FY27 earnings.
That is still a premium to the broader market.
But I do not think all businesses should be valued the same way. In my view, Wesfarmers deserves a higher multiple because of the quality of its assets, balance sheet strength, and long-term growth options.
Why I like Wesfarmers shares
The main attraction is the strength of the group's brands.
Bunnings remains one of the best retail businesses in Australia. It has a powerful position in home improvement, strong customer loyalty, and a store network that would be very hard for competitors to replicate.
Even in an uncertain economic environment, I think Bunnings has qualities that can help it remain resilient. Australians still need to repair, maintain, and improve their homes. The timing of larger projects can move around, but the underlying demand does not disappear.
Kmart is another reason I like Wesfarmers.
Its value-focused offer can be very relevant when households are under pressure. As cost-of-living pressures remain front of mind, I think retailers that can deliver value without damaging the customer experience may be well placed.
That gives Wesfarmers a useful mix. It owns businesses that can benefit in stronger periods, while also having brands that remain relevant when consumers are watching every dollar.
More than just retail
Wesfarmers is best known for Bunnings and Kmart, but I think investors should look beyond the retail story.
The company also has exposure to lithium through its Mt Holland project. This gives Wesfarmers a long-term option in a commodity that could benefit from electric vehicles, batteries, and energy storage.
Lithium prices can be volatile, and I would not make that the only reason to buy the stock. But I like that Wesfarmers has an additional growth lever outside its core retail businesses.
The group also has a strong balance sheet, which I think is a major advantage.
A strong balance sheet gives management flexibility. It can invest through downturns, support growth projects, make acquisitions if attractive opportunities appear, and keep returning capital to shareholders when appropriate.
That matters even more when economic conditions are uncertain.
The dividend adds to the appeal
Wesfarmers is also expected to continue paying fully franked dividends.
According to CommSec, consensus estimates are for dividends per share of $2.16 in FY26 and $2.33 in FY27.
Based on the latest share price, that FY27 forecast dividend implies a yield of around 3.3%, fully franked.
That is not the highest yield on the ASX, but I think it is attractive when combined with the company's quality and long-term growth potential.
Foolish takeaway
Wesfarmers shares are still not cheap in the traditional sense.
But after a 25% fall from their 52-week high, I think the valuation is starting to look much more reasonable for a business of this calibre.
The group has strong brands, a value-focused retail engine, lithium exposure, a solid balance sheet, and fully franked dividends.
For investors looking for a high-quality ASX 200 share to buy and hold, I think Wesfarmers could be a bargain buy at current levels.
