Could Endeavour Group's (ASX:EDV) thirst for capex be a tailwind?

Company News

by Melissa Darmawan

After two days of presentations from Endeavour Group (ASX:EDV), investors have had a chance to digest the key takeaways.

First impressions would have us believe the update from the hospitality and liquor business did little to impress, after its share price fell 5 per cent last Thursday. Investors sold on the news of the company’s capital expenditure intention to buy hotels and invest into its retail digital capabilities.

Other key themes concerned its sustainability commitments, including its responsibility to gambling and alcohol consumption, with the company implementing an algorithm to identify problem gamblers. The growth potential of Pinnacle drinks and Dan Murphy's property prospects were also on the agenda. Commentary also cited several under-utilised sites within its hotel portfolio which could be up for commercial and accommodation development.

Meanwhile, Pinnacle beverage sales have risen 50 per cent since financial year 2019 with analysts believing this growth will continue. Recently, in partnership with Warakirri Asset Management, Endeavour acquired Josef Chromy Wines in Tasmania for $55 million - a move set to grow its exposure to premium and younger customers.

The question lies… As the company combines its retail and hotel businesses, could this be a tailwind for the growth of Dan Murphy stores?

Shares in Endeavour Group are trading 0.4 per cent higher to $7.28.
 

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