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What Should Investors Know About The Future Of LendLease Group's (ASX:LLC)?

Simply Wall St

On 30 June 2019, LendLease Group (ASX:LLC) released its earnings update. Generally, it seems that analyst forecasts are substantially optimistic, as a 61% rise in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -7.4%. Presently, with latest-twelve-month earnings at AU$467m, we should see this growing to AU$753m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for LendLease Group in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for LendLease Group

Exciting times ahead?

The longer term view from the 7 analysts covering LLC is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of LLC's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

ASX:LLC Past and Future Earnings, August 20th 2019

This results in an annual growth rate of 7.9% based on the most recent earnings level of AU$467m to the final forecast of AU$780m by 2022. This leads to an EPS of A$1.38 in the final year of projections relative to the current EPS of A$0.83. Margins are currently sitting at 2.8%, which is expected to expand to 5.1% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For LendLease Group, I've compiled three key aspects you should further research:

  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. Valuation: What is LendLease Group worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LendLease Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of LendLease 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!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.