Wesfarmers Ltd (ASX: WES) shares have pulled back around 17% from their 52-week high.
The retail and industrial conglomerate is trading around $78.48 at the time of writing, down from a high of $95.18.
That is still not what I would call a bargain price. Wesfarmers remains a high-quality ASX 200 share, and the market usually prices it accordingly.
But I think the pullback has made the risk/reward more attractive for long-term investors.
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A collection of strong businesses
One of the main reasons I like Wesfarmers is that it is not dependent on just one business.
Bunnings remains the most important part of the group and continues to be one of the best retail businesses in Australia. Its scale, brand strength, trade exposure, and store network give it a powerful position in home improvement.
But I also think the wider group deserves attention.
Kmart has become a very strong value retailer, which is useful in an environment where households are watching their budgets amid rising interest rates. Officeworks gives Wesfarmers exposure to business, education, technology, and everyday office needs. Priceline adds a health and beauty angle, while the group's digital investments, including OnePass, could help deepen customer relationships across several brands.
There is also the longer-term opportunity from Mt Holland lithium, though this part of the business carries commodity and execution risks.
What I like is that Wesfarmers has several ways to create value over time. Some will perform better than others at different points in the cycle, but the group has shown a long history of owning good businesses, improving them, and continuing to invest where it sees opportunity.
The numbers still support the case
According to CommSec, the consensus estimate is for Wesfarmers to generate earnings per share of $2.55 in FY26 and $2.74 in FY27.
Based on the current share price, that puts the stock on around 31 times FY26 earnings and 29 times FY27 earnings.
That is not cheap. However, I think Wesfarmers can justify a premium valuation because of the quality of its assets, the strength of its brands, and its long record of disciplined management.
The dividend outlook also adds to the appeal.
CommSec's consensus estimates suggest Wesfarmers could pay fully-franked dividends per share of $2.16 in FY26 and $2.33 in FY27.
Based on the current share price, that would imply forward dividend yields of roughly 2.8% and 3%, respectively.
Those yields are not huge, but the franking credits improve the income story for eligible investors. More importantly, I think the dividend is backed by a business with durable earnings and a long-term growth mindset.
Why I'd buy after the pullback
I would not buy Wesfarmers expecting a quick rebound just because the share price has fallen.
The stock can still come under pressure if consumer spending weakens, margins disappoint, or the market becomes less willing to pay premium multiples.
But I do think the recent fall provides a better entry point into one of the ASX's highest-quality companies.
For me, the attraction is the combination of resilience and optionality. Wesfarmers has defensive qualities through everyday retail demand, but it also has growth avenues through Kmart, digital initiatives, healthcare, productivity improvements, and selective industrial exposure.
That mix is hard to find.
Foolish Takeaway
A 17% pullback does not suddenly make Wesfarmers a cheap ASX share.
But it does make a great business more interesting.
I think investors often do well when they buy high-quality companies during periods when expectations have cooled a little. Wesfarmers still has the brands, balance sheet strength, management discipline, and growth options that I want in a long-term holding.
At around $78, I would be happy to buy Wesfarmers shares and hold them for the years ahead.
