Legrand (ENXTPA:LR): Assessing Valuation as Momentum Builds and Shares Hold Steady

Legrand (ENXTPA:LR) has seen its stock hold steady over the past day, with its current price at €130.55. Investors are reviewing its recent performance as the broader sector influences sentiment this month.

See our latest analysis for Legrand.

The past year has seen momentum build for Legrand, with its 12-month share price return rising an impressive 39.33%, and the total shareholder return reaching 40.43%. This longer-term strength comes despite a brief dip this month. This suggests that confidence in the company’s growth potential remains high.

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With shares at their current highs and long-term gains driving optimism, investors may wonder whether Legrand is trading at an attractive value or if all the upside has already been factored into its price. Is there a real buying opportunity here, or has the market already priced in the company’s future growth?

Most Popular Narrative: 8% Undervalued

Legrand’s most widely followed narrative estimates a fair value higher than the current share price, suggesting room for upside if forecasts play out. The narrative stakes its fair value call on trends reshaping digital infrastructure and Legrand’s exposure to key high-growth segments.

Surging investment in data centers, driven by the growth of artificial intelligence and the increasing digitalization of infrastructure globally, is fueling exceptionally strong demand for Legrand's white space products. This trend, supported by a large backlog and an above-1x book-to-bill ratio, is expected to sustain high organic revenue growth through at least 2030.

Read the complete narrative.

Want to know why smart buildings and record-high global demand are at the core of this bullish valuation? Only a few key financial assumptions sit behind these projections. Curious which headline numbers drive this fair value? See the forecasted growth and margins that set this price apart from market expectations.

Result: Fair Value of €141.88 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain, particularly if growth in data centers slows or if weaker building markets weigh on Legrand’s revenue momentum in coming years.

Find out about the key risks to this Legrand narrative.

Another View: Are Market Ratios Sending a Caution Signal?

While many see value based on growth forecasts, the market's price-to-earnings ratio for Legrand stands at 27.9x. This is notably above the European Electrical industry average of 23.3x, the peer average of 17.6x, and higher than the fair ratio of 24.6x. This gap suggests investors are paying a clear premium for Legrand’s growth potential, raising the stakes if the company’s progress falls short of expectations. Is this optimism justified, or are expectations getting ahead of reality?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Legrand Narrative

If these viewpoints do not align with your own or you would rather dive into the numbers and build your personal outlook, you can do so yourself in just a few minutes by using Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Legrand.

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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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