Wesfarmers Ltd (ASX: WES) shares have fallen around 15% over the past month.
At roughly $77.08, they are now much closer to their 52-week low than their recent peak.
I think the pullback has created a better opportunity to buy one of the ASX's highest-quality businesses.
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The businesses are still the main attraction
Wesfarmers owns a collection of market-leading businesses, including Bunnings, Kmart, Officeworks, and Priceline through Wesfarmers Health.
For me, Bunnings remains the standout. Its scale, store network, brand recognition, and relationships with suppliers have taken decades to build. Home improvement spending can move around with economic conditions, but Australians will continue repairing, renovating, and maintaining their homes over the long term.
Kmart has also developed a strong position around affordable everyday products. Its ability to source and develop its own ranges gives consumers a clear reason to keep returning.
I like owning a company with several established businesses capable of producing cash while management continues looking for new areas to invest.
Wesfarmers shares have pulled back
Wesfarmers has rarely looked cheap, and it still does not today.
According to consensus estimates, earnings per share are forecast to rise from $2.72 in FY27 to $2.90 in FY28 and $3.11 in FY29.
At $77.08, that puts the shares on a PE ratio of roughly 28 times forecast FY27 earnings, falling to around 25 times FY29 earnings.
That is still a premium valuation. But consider where investors were only recently. At the 52-week high of $94.70, the same FY27 earnings forecast would have put Wesfarmers on almost 35 times earnings.
I find the current price much easier to justify. Quality businesses rarely spend much time trading at obviously cheap valuations. I am more interested in whether the price gives me a reasonable chance to benefit from years of earnings growth.
I think it does now.
There is income along the way
The dividend outlook also moves in the right direction.
Consensus forecasts point to dividends per share of $2.34 in FY27, $2.49 in FY28, and $2.71 in FY29.
At today's price, that starts with a forecast dividend yield of around 3%, with the potential for income to rise if those estimates are achieved.
I would not buy Wesfarmers primarily for the dividend, but steadily increasing payments can add to the long-term return.
Foolish takeaway
The 15% fall has made Wesfarmers shares considerably more interesting to me.
I am still paying a premium, so this is not a bargain-hunting exercise. I am paying for strong businesses, capable management, and an earnings outlook that points higher over the next few years.
At around $77.08, I think the balance between quality and price has improved enough to make Wesfarmers a buy.
