Wesfarmers Equity Research (ASX: WES)

This wasn't a typical university assignment - we were asked to produce something that looked and read like a real analyst report. So that's what we built.

I constructed a full DCF and relative valuation model on Wesfarmers, one of Australia's eight largest listed companies. Both models converged on a target price of $71.17 against a market price of $68.39 - a 3.98% upside that didn't justify a BUY. The call: HOLD.

The real thesis wasn't the retail core (Bunnings at 91% DIY market share, Kmart at 46% of department stores). It was the Health segment - grown 328% from the API acquisition and already representing 12% of group revenue. That's where the forward story was, and that's what the model was built around.

The result validated everything. One week after we finalised the report, Wesfarmers dropped sharply to around $63 - exactly the kind of near-term caution a HOLD signals. Then, over the following 18 months, it rallied all the way to approximately $92, landing squarely within the range our valuation framework had anticipated. The market took 18 months to get where the model said it was going.

What this proved to me: valuation is only as good as the assumptions behind it. The number isn't the insight - the reasoning that produces it is. And when the market eventually follows the logic you laid out, it's not luck. It's confirmation that the framework worked.