Wesfarmers 1H19 earnings show declines of 8% in the Kmart division and in Bunnings, margins are resilient, however, growth is difficult to achieve.
We consider Wesfarmers near full value at the current 18x FY20 earnings per share multiple.
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Based on FY20 earnings, we have WES trading on a 4.8% yield and we see some price support on the likelihood of a large scale share buy back in the range of $2.5bn +
We recommend selling out of the money calls to enhance the income, whilst staying exposed to the Feb dividend.
