Endeavour Group Ltd (EDV) - Comprehensive analysis
The market tends to undervalue Endeavour's long-term earnings outlook, which is inherently defensive. Consumers are opting for more affordable options and purchasing in bulk for at-home liquor consumption. We believe that the current performance in liquor retailing is indicative of a cyclically weak trading environment, primarily due to heightened cost-of-living pressures. Nevertheless, we anticipate that liquor sales momentum will improve, with sales growth expected to stabilize at durable levels in the mid-single digits starting from fiscal 2026. Over the long term, we view liquor demand as defensive, supported by factors such as inflation, population growth, and a structural shift towards premiumization. Additionally, in the smaller hotels segment, earnings have shown resilience despite the recent implementation of gaming regulations in Victoria.
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