Is Endeavour Group Limited (ASX:EDV) Trading At A 30% Discount?

In the ever-evolving landscape of the stock market, identifying undervalued stocks can be a game-changer for income-focused investors. Endeavour Group Limited (ASX:EDV), a prominent player in the retail drinks and hotels business, has recently caught the attention of many investors. With a dividend yield of 4.94% and a market capitalization of AU$7.90 billion, the question on everyone's mind is: Is Endeavour Group Limited trading at a 30% discount?

To answer this question, let's delve into the key financial metrics and compare them to industry benchmarks.



Earnings Growth and Revenue Performance

Endeavour Group has been growing earnings at an average annual rate of 27.3%, which is slightly higher than the Consumer Retailing industry average of 25.2%. However, the company experienced negative earnings growth of -11% over the past year, compared to the industry average of -8.3%. This decline in earnings has likely dampened investor sentiment and contributed to the stock's underperformance.

Revenue growth has been robust, with an average rate of 14.5% per year. This strong revenue performance is a positive indicator, but it is not enough to offset the negative earnings growth.

Return on Equity (ROE) and Net Margins

Endeavour Group's ROE is 11.6%, indicating a moderate return on equity. The net margins of 3.7% are also moderate, suggesting that the company is operating efficiently but not exceptionally.

Stock Price Performance and Analyst Recommendations

The stock price has decreased by -25.38% in the last 52 weeks, and the beta of 0.26 indicates that Endeavour Group's price volatility has been lower than the market average. The stock price has underperformed the ASX All Ordinaries Index by -22.55% over the past year, which is a significant concern for investors.

Analyst recommendations are mixed, with 5 analysts recommending a "Buy" and 3 recommending a "Hold." This lack of strong buy recommendations may contribute to the stock's underperformance.

Dividend Yield and Payout Ratio

The dividend yield of 4.94% is attractive for income-focused investors. However, the payout ratio of 75% is relatively high, which means that the company is paying out a significant portion of its earnings as dividends. This could be a concern if earnings continue to decline.

Is Endeavour Group Limited Trading at a 30% Discount?

Based on the available data, it is difficult to conclusively determine whether Endeavour Group Limited is trading at a 30% discount. The negative earnings growth and underperformance in stock price compared to industry benchmarks suggest that the stock may be undervalued. However, the high payout ratio and lack of strong buy recommendations from analysts are red flags that investors should consider.



In conclusion, Endeavour Group Limited presents an interesting opportunity for income-focused investors, but it is not without risks. The negative earnings growth and high payout ratio are concerns that investors should carefully consider before making a decision. As always, it is important to do your own research and consult with a financial advisor before making any investment decisions.