Is now the time to buy Wesfarmers shares?

Wesfarmers Ltd (ASX: WES) shares are among the most widely held blue-chip stocks on the ASX. Its brands, including Bunnings, Kmart, Officeworks, Priceline and its industrial and chemicals division, give the group broad exposure across Australia.

After a strong long-term run, the Wesfarmers share price has moved sideways since early November. Trading at $81.56, investors are asking whether this represents a buying opportunity or simply fair value.

Let's take a closer look.

A business built to weather all seasons

Wesfarmers' biggest strength is how spread out its business is.

Bunnings is the company's main profit driver. Even when people spend less overall, they still repair, renovate, and maintain their homes. This helps keep profits more stable during slower retail periods.

Kmart has also continued to perform well. Its focus on low prices has attracted shoppers looking to save money, helping it grow while many other retailers face tougher conditions. Officeworks has remained steady too, supported by demand from schools and small businesses.

Because Wesfarmers doesn't rely on just one business, it has been able to perform well even in a tougher retail environment. Over the past year, the shares have returned about 14%, beating the broader S&P/ASX 200 Index (ASX: XJO).

Capital management remains a key attraction

One area where Wesfarmers consistently impresses investors is how it returns money to shareholders.

In FY25, the company reported net profit after tax of $2.93 billion, up 14.4% from the year before. After this strong result, management announced a $1.50 per share capital management initiative, made up of a capital return and a special dividend.

Because the business generates reliable cash across its different divisions, Wesfarmers is able to return money to shareholders when opportunities are limited. This has resonated well with long-term investors.

What brokers are saying

Views from brokers on Wesfarmers are mixed.

Most analysts rate the stock as a hold. This shows they like the business, but have some concerns about the share price and rising costs.

Shaw and Partners recently kept a hold rating. The broker pointed to Wesfarmers' strong mix of businesses, but warned that higher costs across retail and industrial operations could put pressure on profits in the short term.

Overall, brokers still see Wesfarmers as a high-quality company. However, most expect any share price gains from here to be steady.

Foolish takeaway

At $81.56, Wesfarmers shares aren't cheap, but the valuation still looks reasonable for a business of this quality.

For investors seeking a defensive ASX blue-chip stock, Wesfarmers still earns its place on a long-term watchlist.

Personally, I wouldn't be chasing the shares aggressively at current levels. But on market pullbacks, Wesfarmers is the kind of high-quality stock I'd be happy to accumulate for the long term.

The post Is now the time to buy Wesfarmers shares? appeared first on The Motley Fool Australia.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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