Wesfarmers Ltd (ASX: WES) shares have fallen into the red on Thursday after the conglomerate posted its FY26 results ahead of the ASX open this morning.
At the time of writing, Wesfarmers shares are down around 2% and are changing hands at $81.38 a piece.
Today's price movement means the shares are now down around 1% for the year to date. They're also roughly 11% lower than 12 months ago.
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What is spooking investors today?
The company reported a 3.4% increase in revenue, to $47.3 million, and a 7.3% increase in EBIT. But statutory NPAT fell 1.8% to $2.8 million including significant items, or was up 8.3% excluding them.
The result meant management was able to declare a full-year fully-franked ordinary dividend of 222 cents per share. This was a 15.8% increase from FY25.
The conglomerate saw strong performance across its major Bunnings and Kmart divisions, with earnings lifting 5.1% and 6% respectively over the 12-month period to 30th of June.
But elsewhere, Officeworks' earnings fell 22.2%, mainly due to one-off transformation costs.
Wesfarmers' result came in slightly ahead of the market's $47.1 billion forecasts for revenue, and was in line with expectations for NPAT.
Going forward, Wesfarmers said it expects higher capital expenditure in FY27, of $1.3 to $1.5 billion. The increase is expected to support lithium production, store refurbishments, supply chain upgrades, and the start of a new joint venture in modular residential construction.
Early trading in FY27 shows Bunnings' sales growth is slightly ahead of the second half of FY26. Kmart and Officeworks have both maintained positive momentum.
It looks like investors are disappointed with the results, and some are selling up this morning.
Here's what brokers expect from Wesfarmers shares over the next 12 months
I expect that some market experts may revise their outlook on the Wesfarmers share price in the coming days, following the results announcement.
But at the time of writing, it looks like the experts are pretty bearish about the conglomerate's outlook.
TradingView data shows that out of 15 analysts, nine have a strong sell rating on the shares. Another five rate Wesfarmers shares as a hold, and one has a buy rating. The average target price is $77.56, implying a potential 5% downside ahead. Some are even more pessimistic, expecting the shares to crash by up to 20% to $65.10 over the next 12 months.
The team at Morgan Stanley has a sell rating and a $79 12-month price target on the shares. The broker recently warned that the rally in discretionary spend stocks has "run ahead of fundamentals and is unlikely to prove durable".
Tony Locantro from Alto Capital also has a sell rating on Wesfarmers shares. He thinks that much of the company's long-term growth outlook is already reflected in the current valuation.
