The Wesfarmers Ltd (ASX: WES) share price is trading in the red today, currently swapping hands at $43.71 apiece.
Zooming out, and Westfamers shares have been on a downward trajectory across the past 12 months.
After testing 52-week highs of approximately $60 per share roughly five to six times in late FY21, the share broke away to the downside, as seen on the chart below.
It has continued on this path since and continues to drift towards the company's 52-week low of $41.16 on 17 June.
Image source: Getty Images
Wesfarmers ready for a comeback?
In order for a reversal in the Wesfarmers share price from the long-term downtrend, there needs to be support from both fundamental factors and valuation.
Wesfarmers currently trades at a price-to-earnings (P/E) ratio of 21.2 times, or 20.5 times on a forward P/E basis.
Both of these are in front of the GICS Consumer Cyclical median scores of 20.7 times and 16.5 times, respectively.
In addition, it is priced at almost 17.5 times cash from operations, and this looks to reduce to 12.2 times by the next 12 months based on consensus data from Refinitiv Eikon.
What this means for the Wesfarmers share price we won't know for some time. However, there look to be some challenges ahead at the valuation level.
Brokers are constructive on the Wesfarmers share price too, with six analysts rating the share a buy, per Refinitiv. This is coupled with a consensus price target of $49.07, suggesting a small amount of upside from its current market price.
In particular, those at investment house Morgans reckon Wesfarmers is set to deliver strong upside growth over the next year or so.
"Wesfarmers possesses the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks," it said in a recent note.
"The company is run by a highly regarded management team and the balance sheet is healthy."
Those at Morgans also reckon there is good reason to enter or size up a position on this volatility.
"We see the pullback in the share price as a good entry point for longer-term investors," it added.
Alas, whether the company is a buy or not remains to be seen. However, time will certainly tell.
In the meantime, the Wesfarmers share price is down 21% in the past year and 26% this year to date.
