What’s Ahead For Land Securities Group plc (LON:LAND)?
Land Securities Group plc (LSE:LAND) is a UK£6.94B real estate investment trust (REIT), which is a collective vehicle for investing in real estate that began in the US and has since been adopted worldwide as an investment asset. Real estate analysts are forecasting for the entire industry, negative growth in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the UK stock market as a whole. Today, I’ll take you through the real estate sector outlook, and also determine whether Land Securities Group is a laggard or leader relative to its real estate sector peers. View our latest analysis for Land Securities Group
What’s the catalyst for Land Securities Group’s sector growth?
Concerns surrounding rate increases and treasury yield movements have made investors dubious around investing in REIT stocks. This is because REITs tend to be dependent on debt funding. They are also considered as bond investment alternatives due to their high and stable dividend payments. Over the past year, the industry saw negative growth of -10.80%, underperforming the UK market growth of 12.33%. Land Securities Group lags the pack with its negative growth rate of -67.20% over the past year, which indicates the company will be growing at a slower pace than its REIT peers. Moreover, the trend of below-industry growth rate is expected to continue in the future with Land Securities Group poised to deliver a -251.77% growth compared to the industry average growth rate of -24.26%.
Is Land Securities Group and the sector relatively cheap?
The REIT sector’s PE is currently hovering around 11.07x, below the broader UK stock market PE of 17.64x. This means the industry, on average, is relatively undervalued compared to the wider market – a potential mispricing opportunity here! Though, the industry did returned a lower 8.42% compared to the market’s 12.79%, which may explain the lower relative valuation. On the stock-level, Land Securities Group is trading at a higher PE ratio of 40.23x, making it more expensive than the average REIT stock. In terms of returns, Land Securities Group generated 1.57% in the past year, which is 6.85% below the REIT sector.
Next Steps:
Land Securities Group is a REIT industry laggard in terms of its future growth outlook. In addition to this, the stock is trading at a PE above its peers, meaning it is more expensive on a relative earnings basis.If Land Securities Group has been on your watchlist for a while, now may not be the best time to enter into the stock. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the real estate sector. However, before you make a decision on the stock, I suggest you look at Land Securities Group’s fundamentals in order to build a holistic investment thesis.
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Historical Track Record: What has LAND’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Land Securities Group? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
