Up 10% in a month, why the Endeavour (ASX:EDV) share price has still ‘got legs’: fundie


The Endeavour Group Ltd (ASX: EDV) share price has managed to handily outperform the S&P/ASX 200 Index (ASX: XJO) since listing on 24 June last year.

While the ASX 200 is down 3.3% since 24 June, the Endeavour share price has leapt more than 15% higher. It’s also up 10% in the past month.

Why have investors been rewarding the company?

Endeavour, as you’re likely aware, is a spin-off from the supermarket giant Woolworths Group Ltd (ASX: WOW).

The company has a market cap of $12.5 billion. Its portfolio includes well-known alcohol businesses like Dan Murphy’s, BWS, Cellarmasters and more. It also owns numerous licensed hospitality venues and manages more than 330 licensed venues.

ASX investors rewarded the company after it released strong financial results in its maiden reporting season as a listed company.

Some highlights included a 15.6% leap in group net profit after tax (NPAT), which reached $311 million. Earnings per share (EPS) were up 16% from the prior corresponding period to 17.4 cents per share (cps). And Endeavour declared an interim dividend of 12.5 cents per share, fully franked.

The Endeavour share price gained 10% on the day.

But after such a strong run of outperformance, can the company continue to deliver?

Why the Endeavour share price has still ‘got legs’

For some insight into what investors might expect in the year ahead for the Endeavour share price, we defer to Michelle Lopez, Head of Australian Equities at abrdn.

Asked by Live Wire which single share “stood out as a great result in reporting season”, Lopez said:

For us, Endeavour was one of those. And Endeavour was the spinoff from Woolies. They had the retail side, which is your Dan Murphy’s and BWS, and then you had the pubs and hotels. So they own a portfolio nationwide. And really that stood out, particularly the margins within the retail business, they were significantly higher than expectations. So it drove a 20% beat at the earnings line.

Among the strengths supporting the Endeavour share price, Lopez highlighted the company’s broadly diverse portfolio:

Endeavour’s one of these stocks that almost there’s a natural hedge within the business itself. So yes, they’ve got the retail side. But they’ve also got the pubs and the hotels. And it’s the largest portfolio from a listed company. They get the reopening trade. They’ve done really well, up until now, from consumption at home, and now pivoting into the hotels, which is three times the margin of the in-home. So I think that one did really well.

Lopez noted that the Endeavour share price gained 10% on 21 February, the day it reported those results.

“But I still think it’s got legs from here,” she added.

Source: Read More

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