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While Lendlease Group (ASX:LLC) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the ASX, rising to highs of AU$12.25 and falling to the lows of AU$9.03. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Lendlease Group's current trading price of AU$9.50 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Lendlease Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Lendlease Group
What's the opportunity in Lendlease Group?
Great news for investors – Lendlease Group is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is A$14.92, but it is currently trading at AU$9.50 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Lendlease Group’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will Lendlease Group generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In Lendlease Group's case, its revenues over the next few years are expected to grow by 34%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since LLC is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on LLC for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy LLC. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.