Yahoo Finance What Is The Future Prospect For Real Estate And Land Securities Group plc (LON:LAND)?
Land Securities Group plc (LSE:LAND) is a UK£7.05B real estate investment trust (REIT), which is a collective vehicle for investing in real estate that originated in the US and has since been taken on board globally. 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?
Issues around rate hikes and yield changes have made investors sceptical of REITs. The capacity for these investment vehicles to absorb a rate hike should be considered, hence, factors such as lease durations and pricing power in the market would require a deeper dive. Over the past year, the industry saw growth of over 50%, beating the UK market growth of 18.19%. Land Securities Group lags the pack with its earnings falling by more than half over the past year, which indicates the company will be growing at a slower pace than its REIT peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 86.05% in the upcoming year.
Is Land Securities Group and the sector relatively cheap?
The REIT industry is trading at a PE ratio of 10.4x, below the broader UK stock market PE of 17.31x. 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 8.82% compared to the market’s 12.39%, which may explain the lower relative valuation. Since Land Securities Group’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Land Securities Group’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Land Securities Group’s industry-beating future is a positive for investors. If Land Securities Group has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the REIT industry. 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.
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.
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.
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.
