Endeavour Group Limited (ASX: EDV) 

Endeavour Group Limited (ASX: EDV) operates a retail drinks network with stores under the Dan Murphy’s and BWS brands. Its specialty businesses are engaged in the production and distribution of exclusive brands. The ASX-listed company also has a portfolio of licensed hotels across Australia.

Recommendation Rationale – SELL at AUD 4.230 

• Overvalued Multiples: On a forward 12-month basis, the stock is trading at an EV/Sales multiple of 0.94x vs industry (consumer staples distribution & retail) median of 0.70x
• Profit Decline Amidst Rising Costs: Group net profit after tax fell by 3.2% YoY for FY24 ended 30 June 2024, owing to higher finance costs.
• Lower Guidance: The company expects its 1HFY25 retail operating EBIT margin to be 7.0%-7.5%, down from 8.0% in 1HFY24, due to inflationary pressures, softer sales, and a lower-margin sales mix.
• Emerging Risks: EDV faces risks from regulatory changes, competition, shifting consumer preferences, supply chain disruptions, economic downturns, and declining alcohol consumption among younger demographics, impacting liquor retail sales.

EDV Daily Chart

Given its current trading levels, market uncertainties, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the closing market price of AUD 4.230, as of 30 January 2025.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 30 January 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.    

Note 4: Dividend Yield may vary as per the stock price movement.  

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.