Fund Manager Summary
The fund managers believe that Endeavour Group Ltd presents a compelling investment opportunity despite recent challenges. They note that the company has experienced a significant share price decline of over 50% since its 2022 peak, largely due to Covid-related disruptions, rising interest rates, and pressures on consumer spending. However, in their opinion, the alcohol retail and hotel sectors have historically shown consistent growth. With the business now trading at approximately 13 times adjusted earnings and offering a gross dividend yield above 7%, the fund managers see potential for recovery. They suggest that as interest rates normalize and costs related to the One Endeavour initiative ease, Endeavour’s strong market position and significant barriers to entry could lead to renewed growth.
Source: Trading View
Commentary From The Managers
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Pendal Group
3 Nov 2025
$3.59
Summary
- Pendal Group continues to hold its position in Endeavour Group Ltd (EDV) despite recent challenges.
- Endeavour’s AGM trading update revealed a 1% decline in retail liquor sales for 1Q26, marking the fifth consecutive quarter of declining growth.
- There was a return to growth in October, indicating potential recovery signs.
- Hotels sales grew by 4.4%, although this growth slowed in October.
- Results were slightly below consensus estimates, reflecting ongoing market challenges.
- The company has indicated significant headwinds ahead, particularly with gross margin pressure expected to persist into 2Q26.
- The retail liquor market continues to face pressure, impacting overall performance.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Pendal Group
3 Nov 2025
$3.59
- Pendal Group continues to hold its position in Endeavour Group Ltd (EDV) despite recent challenges.
- Endeavour’s AGM trading update revealed a 1% decline in retail liquor sales for 1Q26, marking the fifth consecutive quarter of declining growth.
- There was a return to growth in October, indicating potential recovery signs.
- Hotels sales grew by 4.4%, although this growth slowed in October.
- Results were slightly below consensus estimates, reflecting ongoing market challenges.
- The company has indicated significant headwinds ahead, particularly with gross margin pressure expected to persist into 2Q26.
- The retail liquor market continues to face pressure, impacting overall performance.
Summary
Ten Cap
8 Oct 2025
$3.54
- Ten Cap identified significant leadership issues at Endeavour Group, particularly the absence of a permanent CEO since March.
- Jun Bei Liu expressed concerns about the company’s direction as it approaches the critical summer trading season.
- Endeavour Group is currently managed by Kate Beattie, the former CFO, until the new CEO Jayne Hrdlicka starts next year.
- The company operates numerous outlets, including 1700 bottle shops and various pubs, but has faced declining sales.
- Recent sales figures for Dan Murphy’s and BWS chains have shown a downward trend.
- Endeavour's shares have fallen 15 percent this year, hitting a record low recently.
- Liu noted that the lack of management guidance has negatively impacted staff morale and overall company performance.
Summary
Blackwattle Investment Partners
30 Sept 2025
$3.63
- Blackwattle Investment Partners sold their investment in Endeavour due to concerns about their value proposition and inability to maintain a competitive price.
- There are key risks associated with a CEO changeover, which could impact the company's direction.
- Historical experience suggests that turnarounds in similar businesses often take longer and cost more than anticipated.
- The alcohol market is facing cyclical pressures, leading to declining consumption volumes.
- Consistent price increases are challenging, placing additional pressure on profitability.
- Endeavour's balance sheet is concerning, being over three times levered, raising risks of potential downgrades or financial adjustments.
- Overall, Blackwattle Investment Partners prefers to remain on the sidelines regarding Endeavour for the time being.
Summary
Pendal Group
30 Sept 2025
$3.63
- Short EDV: Pendal Group considers this a caution/sell situation.
- Current Position: The fund manager is selling at this stage due to ongoing challenges.
- Management Turnover: Recent changes in management make the company more intriguing.
- Business Headwinds: Significant challenges across various sectors, including pubs, gaming, and off-premise sales.
- Fixable Issues: Many challenges are seen as potentially addressable through market cycles or management changes.
- CEO Transition: Concerns exist about potential downgrades with the arrival of the new CEO.
- Future Opportunities: The situation may evolve into a restructuring opportunity with the right management interventions.
- Close Monitoring: Pendal Group is watching the developments closely but maintains a cautious stance for now.
- Downgrade Risk: Current assessment indicates a risk of downgrade in the near term.
Summary
PM Capital
30 June 2025
$4.01
- Endeavour Group is Australia's largest alcohol retailer and hotelier, spun out from Woolworths in 2021.
- Since its peak in 2022, Endeavour has faced a gradual share price decline of over 50%.
- Historically, alcohol retail and hotels are consistent growth categories, but Endeavour has encountered several challenges:
- Covid-related disruptions
- Rising interest rates
- Pressures on consumer discretionary spending
- Concerns around alcohol moderation trends
- Potential gaming machine reforms
- Boardroom disputes
- Complications from separation from Woolworths
- These challenges have led to a material valuation re-rating, with the business now trading at approximately 13 times adjusted earnings.
- Endeavour offers a gross dividend yield above 7%.
- With interest rates potentially normalising, wages catching up to inflation, and One Endeavour-related costs easing, PM Capital continues to hold because:
- It represents an interesting opportunity for a business with strong market positions.
- There are significant barriers to entry, particularly in the retail sector.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"Amidst a backdrop of challenges, Endeavour Group's steep valuation drop may hint at a compelling entry point. With potential easing of costs and a robust market position, it seems poised for a rebound in a recovering economy."
Last Updated: 03 Nov 2025
Query The Data
Frequently Asked Questions
Who is investing in Endeavour Group Ltd (ASX:EDV)?
Fund managers including PM Capital, Ten Cap, Pendal Group and Blackwattle Investment Partners have invested in Endeavour Group Ltd (ASX:EDV).
Why do fund managers invest in Endeavour Group Ltd?
Fund managers are investing in Endeavour Group Ltd due to its strong market position as Australia's largest alcohol retailer and hotelier, despite recent challenges that have led to a significant share price decline. The company is currently trading at a low valuation of approximately 13 times adjusted earnings, with a gross dividend yield exceeding 7%. With expectations of normalizing interest rates and easing operational costs, fund managers see potential for recovery and growth in a historically stable sector.
What happened to Endeavour Group Ltd (ASX:EDV)?
Fund managers are cautious about investing in Endeavour Group Ltd due to ongoing leadership instability and declining sales across its key brands, particularly Dan Murphy's and BWS. The company has faced significant headwinds, including a lack of permanent management and pressure on margins in the retail liquor market. While some see potential for future restructuring and improvements under new leadership, the current outlook includes risks of further downgrades and challenges in navigating a competitive landscape. Overall, the sentiment leans towards caution, with many fund managers advising a sell or short position.