2249 GMT - Wesfarmers is a well-run business with a reasonable growth outlook, but the stock's valuation makes it a risky investment, Barrenjoey analysts say after the company held a strategy briefing for investors. The Barrenjoey analysts say the stock trades at its highest-ever price-to-earnings multiple of 32.5x and premium to market of 77%, plus its lowest-ever dividend yield of 2.7%. They add that the market is too optimistic about Wesfarmers's chemicals, energy and fertilizers business, pointing out their earnings forecast for that unit is 34% below consensus. On the bright side, the analysts say they are confident in their forecasts for the company's main retail businesses. "While investors aren't, by and large, taking earnings risk, they are taking valuation risk, hence we keep underweight," they write in a research note. (mike.cherney@wsj.com)
(END) Dow Jones Newswires
May 22, 2025 18:49 ET (22:49 GMT)
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