Is Now the Right Moment for Legrand After a 48% Jump in 2025?

Thinking about whether to buy, hold, or sell Legrand stock? You are definitely not alone. Legrand has caught the eye of many investors thanks to its solid performance over both the short and long term. In just the past week, the stock jumped 6.1%, and the rally hasn’t been a fluke; it is up 48.5% since the start of the year and an impressive 119.3% over the last five years. Those are numbers that would make any portfolio look good. With moves like these, it is natural to wonder if the current price still offers upside, or if things are looking a bit stretched.

Broadly speaking, the market’s positive outlook for electrical and digital building infrastructure has no doubt supported Legrand’s growth trajectory. Shifts toward energy efficiency, smart technology, and sustainability have made the sector more attractive in recent years. As investor attention has followed, sentiment has clearly driven Legrand’s stock to new highs, even as risk perceptions continue to ebb and flow with broader market conditions.

But let us look under the hood for a second. When it comes to valuation, Legrand’s value score stands at 0 out of a possible 6, meaning the stock is not currently undervalued based on the six checks analysts typically use. That is a key detail investors should keep in mind as we explore what these valuation approaches actually tell us. There might just be a smarter way to judge value by the end of this article.

Legrand scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Legrand Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a valuation approach that estimates a company’s intrinsic value by projecting its future cash flows and then discounting them back to today’s value. For Legrand, this model uses its Free Cash Flow (FCF) as the basis for analysis, considering both analyst estimates and longer-range extrapolations.

Currently, Legrand’s Free Cash Flow is €1.30 billion. Over the next five years, analysts anticipate steady growth, with FCF expected to reach €1.76 billion by the end of 2029. Beyond that, projections extend up to ten years, incorporating incremental annual increases as estimated by financial models.

Using this DCF method, Legrand’s estimated intrinsic value is €97.41 per share. Based on this calculation, the stock is trading at a 42.8% premium to its fair value, indicating that shares are significantly overvalued according to DCF analysis.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Legrand.

Our Discounted Cash Flow (DCF) analysis suggests Legrand may be overvalued by 42.8%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Legrand Price vs Earnings

For established, profitable companies like Legrand, the Price-to-Earnings (PE) ratio is one of the most straightforward and popular valuation tools. It provides a direct measure of how much investors are willing to pay for each euro of earnings. This makes it especially useful for comparing companies that consistently generate profits.

The "normal" or fair PE ratio for a stock often depends on expectations for future earnings growth and perceived risk. Companies with faster expected growth or lower risk profiles typically have higher PE ratios, while slower-growing or riskier businesses generally trade at lower multiples.

Legrand’s current PE ratio stands at 30x. In comparison, the industry average PE is around 30.5x, while the average among similar peers is 25.8x. At face value, Legrand trades roughly in line with its industry but carries a premium compared to its peers.

This is where Simply Wall St’s proprietary "Fair Ratio" is relevant. The Fair Ratio, at 22.2x for Legrand, accounts for not just industry comparisons but also factors such as the company’s profit margin, expected growth rate, market capitalization, and business risks. This approach provides a more comprehensive and company-specific benchmark than relying solely on industry or peer averages.

Comparing Legrand’s current PE of 30x to its Fair Ratio of 22.2x indicates that the shares are trading well above their fundamentally justified valuation using this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Legrand Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is an easy-to-use tool that lets you shape your own story for a company by combining your expectations for future revenue, earnings, and profit margins with the numbers behind them, connecting your view of the business to a fair value estimate.

Rather than simply accepting standard models, Narratives make investing more personal and dynamic; they help you link Legrand’s real-world developments and potential to a financial outlook, all within Simply Wall St's Community page, which is trusted by millions of investors.

With Narratives, you can decide if you believe Legrand's premium valuation is justified, as you compare your own Fair Value to the latest share price. This allows you to make more informed buy, hold, or sell decisions in the process.

As news or earnings updates come in, Narratives update automatically, so you are always working with the latest information and forecasts aligned with your view.

For example, some investors see Legrand’s future driven by surging data center demand, with price targets as high as €165, while others expect challenges in core building markets and more modest values near €82. Narratives allow you to see, test, and compare both perspectives based on your unique outlook.

Do you think there's more to the story for Legrand? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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