LEG Immobilien AG (ETR:LEG): Is It A Smart Long Term Opportunity?

Since LEG Immobilien AG (ETR:LEG) released its earnings in March 2019, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 5.3% next year against the higher past 5-year average growth rate of 41%. By 2020, we can expect LEG Immobilien’s bottom line to reach €888m, a jump from the current trailing-twelve-month of €843m. I will provide a brief commentary around the figures and analyst expectations in the near 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 LEG Immobilien

What can we expect from LEG Immobilien in the longer term?

The view from 12 analysts over the next three years is one of negative sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of LEG'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.

By 2022, LEG's earnings should reach €730m, from current levels of €843m, resulting in an annual growth rate of -6.5%. This leads to an EPS of €8.01 in the final year of projections relative to the current EPS of €13.34. The primary reason for earnings contraction is due to top-line expansion of 2.3%, which is predicted to lag cost growth leading up to 2022. But by the end of 2022, analysts are expecting slower cost growth, resulting in a margin expansion, from the recent 104% to 115%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For LEG Immobilien, I've put together three important factors you should look at:

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 LEG Immobilien 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 LEG Immobilien is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of LEG Immobilien? 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.