Legrand (ENXTPA:LR) has been catching investors’ eyes lately, even without a dramatic news event driving the stock. Sometimes, it’s these quieter periods that prompt the biggest debates: is the stock’s recent uptick just noise, or is there a bigger story underneath? With shares moving steadily in the absence of a headline-grabbing catalyst, it sets the stage for a closer look at how the market is viewing Legrand and what investors might be missing when attention drifts elsewhere.
Zooming out, the past year has been quite a ride for Legrand shareholders. The stock has climbed nearly 39% over the last twelve months, with momentum building further this year. Shares are up 43% since January and gained more than 22% in the past three months alone. While recent weeks have brought more modest moves, this trend fits into the wider picture of steady revenue and earnings growth, painting a company that’s managed to thrive even without headline events.
So after such a strong run, is Legrand offering long-term value at today’s price, or is the market already betting on even brighter days ahead?
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Most Popular Narrative: 3.7% Overvalued
The most widely followed narrative currently suggests that Legrand’s share price is trading at a small premium compared to fair value, based on growth estimates and long-term market trends.
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.
Curious how bold growth bets could make or break this valuation? The narrative hinges on aggressive long-term projections for both revenue and earnings, in addition to a profit multiple that outpaces most industry peers. Wondering what specific assumptions are boosting Legrand’s fair value above market consensus? Discover the numbers and tension points that could shape the company's premium price in the years ahead.
However, caution is warranted if data center demand falters or if U.S. construction weakness persists longer than expected. This could potentially challenge Legrand’s growth outlook.
Another View: Our DCF Model Tells a Different Story
Taking a step back, the SWS DCF model points to a much more cautious outlook for Legrand’s value. This suggests shares might be well above fair value by this measure. Could reliance on simple multiples be missing key risks?
If you’re keen to dig deeper or challenge these conclusions, it's simple to build your own story using the same data in just a few minutes. Do it your way
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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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Kshitija (or Keisha) Bhandaru is an Equity Analyst at Simply Wall St and has over 6 years of experience in the finance industry and describes herself as a lifelong learner driven by her intellectual curiosity. She previously worked with Market Realist for 5 years as an Equity Analyst.
