Legrand (ENXTPA:LR): Is There Untapped Value in the Stock’s Recent Quiet Rally?

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?

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.

Result: Fair Value of €129.52 (OVERVALUED)

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

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.

Find out about the key risks to this Legrand narrative.

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?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Legrand for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Legrand Narrative

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

A great starting point for your Legrand research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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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