Shares in the Aussie conglomerate are trending lower on Friday
The post What you need to know about Wesfarmers (ASX:WES) $2.3bn capital return appeared first on The Motley Fool Australia. –
The Wesfarmers Ltd (ASX: WES) $2.3 billion capital return has so far failed to excite investors this morning. The hefty return to shareholders comes following a strong full-year result from the Aussie conglomerate.
However, the Wesfarmers share price is down 2.3% at the time of writing, trading at $62.49. Let’s take a look.
What you need to know about Wesfarmers’ $2.3 capital return
In case you missed it, Wesfarmers released its results for the year ended 30 June 2021 (FY21) this morning. Some of the key takeaways from the update include:
Revenue up 10.0% on the prior corresponding period (pcp) to $33,941 million
Earnings before interest and tax (EBIT) up 18.8% on pcp to $3,776 million
Net profit after tax up 16.2% on pcp to $2,421 million
Free cash flow down 47.2% on pcp to $2,741 million
Basic earnings per share (EPS) up 16.2% on pcp to 214.1 cents
Full-year, fully-franked dividend up 17.1% on pcp to 178 cents
In addition to the above, Wesfarmers announced a significant capital return to shareholders. That is set to come in the form of a 200 cents per share payment on top of the company’s final dividend.
The $2.3 billion capital return to Wesfarmers shareholders comes after years of speculation about the Wesfarmers mergers and acquisitions (M&A) war chest.
Today’s result was backed by strong divisional performance from Bunnings, Kmart Group, Officeworks and Industrial and Safety. The largest EBIT growth was recorded by Kmart (+69.0%) and Industrial and Safety (+79.5%).
Wesfarmers gave approval alongside its joint venture (JV) partner to commence construction at the Mt Holland lithium project. First production of lithium hydroxide is expected to start in the second half of the calendar year 2024.
The Wesfarmers capital return, in addition to the final dividend, will give shareholders a total distribution of 378 cents per share. That wasn’t enough to boost the Wesfarmers share price higher on Friday as investors weighed up the news against future growth opportunities.
Should you invest $1,000 in Wesfarmers right now?
Before you consider Wesfarmers, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Wesfarmers wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
The Wesfarmers (ASX:WES) share price fell 10% last time the company reported
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.