Is Lendlease Group Valued Fairly Within the ASX 200 Index?

May 10, 2025 10:31 AM AEST | By Team Kalkine Media

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Is Lendlease Group Valued Fairly Within the ASX 200 Index? — Image source: shutterstock

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Highlights

Lendlease Group (LLC) operates in the real estate and construction sector and is listed on the S&P/ASX 200 Index.

Current share price aligns closely with equity value derived from projected cash flow models.

Calculations involve multi-phase growth assumptions and discounting based on industry benchmarks.

Lendlease Group (ASX:LLC), listed on the S&P/ASX 200 Index, is active in the real estate and construction sector. The company's market activity has drawn attention due to the proximity between its current share price and the estimated equity value derived through discounted cash flow projections. This alignment presents a scenario where the market valuation and calculated financial estimates are closely matched.

Discounted Cash Flow Method Used for Valuation

The equity value for Lendlease Group has been derived using a discounted cash flow (DCF) approach. This methodology applies a two-stage growth model, accounting for an early growth phase followed by a more stable period. Expected future cash flows are projected over an extended time frame and discounted using a set rate, which aligns with general industry practices. The outcome reflects an equity valuation that corresponds with the current share price.

Terminal Value Application in the Final Phase

Following the initial projection period, a terminal value is calculated to represent expected perpetual cash flows. This stage incorporates broader economic indicators, including bond-based growth assumptions. The final equity value is then determined by combining the present value of both stages and allocating it on a per-share basis. For Lendlease Group, this final figure shows minimal variance from the current market price.

Market Metrics and Observational Limitations

Valuation outcomes using the DCF method depend on the input variables, such as discount rates and projected financial performance. Certain factors like economic cycles, debt structure, and sector-specific developments fall outside the DCF model’s scope. These elements may influence the broader context but are not directly reflected in the equity value.

Lendlease Group’s Standing Among ASX 200 Peers

As part of the S&P/ASX 200 Index, Lendlease Group shares its platform with other large-cap Australian companies. Its valuation, share price stability, and sector-specific performance offer reference points for comparison within the listed real estate and construction peers across the ASX.

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