Should You Buy Legal & General Group Plc (LON:LGEN) Now?
Let’s talk about the popular Legal & General Group Plc (LSE:LGEN). The company’s shares saw a double-digit share price rise of over 10% in the past couple of months on the LSE. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Legal & General Group’s outlook and value based on the most recent financial data to see if the opportunity still exists. Check out our latest analysis for Legal & General Group
Is Legal & General Group still cheap?
Good news, investors! Legal & General Group is still a bargain right now. My valuation model shows that the intrinsic value for the stock is £4.01, but it is currently trading at UK£2.79 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Legal & General Group’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Legal & General Group generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a negative profit growth of -3.02% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Legal & General Group. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although LGEN is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to LGEN, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on LGEN for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Legal & General Group. You can find everything you need to know about Legal & General Group in the latest infographic research report. If you are no longer interested in Legal & General Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
