Wesfarmers (ASX:WES) Valuation Reassessed After Infinity Pharmacy Collapse And Earnings Update Nears

Simply Wall St.01-21

AdvertisementWhy the Infinity Pharmacy collapse matters for Wesfarmers (ASX:WES) The collapse of Infinity Pharmacy Group and Wesfarmers’ decision to walk away from a proposed rescue have put fresh ...

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The 30 day share...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"WES":"Western Midstream Operating, LP.","WES.AU":"WESFARMERS LTD"},"translate_title":"Infinity Pharmacy倒闭和盈利更新临近后，Wesfarmers(ASX：WES)估值重新评估","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"WES":1.5,"WES.AU":1.5},"content_text":"AdvertisementWhy the Infinity Pharmacy collapse matters for Wesfarmers (ASX:WES) The collapse of Infinity Pharmacy Group and Wesfarmers’ decision to walk away from a proposed rescue have put fresh focus on how its health division and wholesale exposure might be addressed in the upcoming half year results. See our latest analysis for Wesfarmers. Wesfarmers shares closed at A$83.33 and recent Infinity Pharmacy headlines arrive as the company heads into its 19 February half year update. The 30 day share price return is 2.85%, while the 90 day share price shows a decline of 8.47%. Total shareholder return over one and five years sits at 19.34% and 89.50% respectively, indicating that longer term holders have seen stronger gains than more recent buyers. If the pharmacy news has you rethinking where health fits in your portfolio, it could be a good moment to scan other healthcare stocks that might suit your approach. With Wesfarmers trading around A$83, recent returns look solid and forecast-based price targets sit slightly below the current level. After the Infinity fallout, the key question is whether there is still a genuine buying opportunity here or if future growth is already baked in. Price-to-Earnings of 32.3x: Is it justified? On a P/E of 32.3x at a last close of A$83.33, Wesfarmers screens as expensive compared with both its own fair ratio and key peer benchmarks. The P/E multiple tells you how much investors are paying for each dollar of current earnings. This is a useful shorthand for how the market is treating a retailer like Wesfarmers. A higher P/E often reflects confidence in earnings quality, consistency or future profit growth, while a lower P/E can signal either caution or genuinely low expectations. Here, the data points in one direction. Wesfarmers trades at 32.3x earnings compared with an estimated fair P/E of 29.4x, the global multiline retail average of 19.9x and a peer average of 23.7x. That is a clear premium, which suggests the market is willing to pay more for Wesfarmers’ earnings than for many peers, even though forecasts point to revenue and profit growth that is slower than the broader Australian market. Explore the SWS fair ratio for Wesfarmers Result: Price-to-Earnings of 32.3x (OVERVALUED) However, the premium P/E and the Infinity Pharmacy fallout both highlight execution risk in the health division and leave less room for error if sentiment cools. Find out about the key risks to this Wesfarmers narrative. Another View: Our DCF model points the other way While the 32.3x P/E suggests the market is comfortable paying a premium, our DCF model presents a different picture. It estimates Wesfarmers’ future cash flows support a value of A$43.82 per share, compared with the current A$83.33 price, which appears overvalued on that basis. Look into how the SWS DCF model arrives at its fair value. WES Discounted Cash Flow as at Jan 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Wesfarmers for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 874 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.  Build Your Own Wesfarmers Narrative If this framework does not quite fit how you see Wesfarmers, you can stress test the numbers yourself and build a fresh view. Do it your way in minutes. A great starting point for your Wesfarmers research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision. Looking for more investment ideas? If you are reassessing your next move after looking at Wesfarmers, do not stop here, use the tools already available to spot ideas that fit your style.  Scan for potential value by reviewing these 874 undervalued stocks based on cash flows that align with the kind of price and quality mix you want in your portfolio. Spot emerging themes by checking out these 19 cryptocurrency and blockchain stocks that link equity markets with digital assets and blockchain applications. Focus on income potential by zeroing in on these 13 dividend stocks with yields > 3% that may suit a yield focused approach to building long term returns.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if Wesfarmers might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. 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