Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) is on form again on Thursday. In afternoon trade, the benchmark index is up 0.4% to 8,639.3 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Amcor (ASX: AMC)

The Amcor share price is down 1% to $12.98. This has been driven by the packaging company’s shares going ex-dividend this morning for its latest payout. Earlier this month, Amcor released its quarterly update and declared a quarterly dividend of 19.8 cents per share. This will be paid to eligible shareholders next month on 17 December.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is down 7% to $2.02. This is despite there being no news out of the counter drone technology company on Thursday. However, it is worth noting that its shares have rallied hard in recent sessions. For example, prior to today, they were up 26% since the end of last week. It seems that some traders have decided to take a bit of profit off the table during Thursday’s session.

Harvey Norman Holdings Ltd (ASX: HVN)

The Harvey Norman share price is down 3% to $7.07. This may have been driven by a broker note out of Macquarie this morning. According to the note, the broker has downgraded the retailer’s shares to a neutral rating with an improved price target of $7.60 (from $7.40). While relatively pleased with the company’s trading update at its annual general meeting, it feels that its shares are fairly valued now. Especially given their re-rating over the past 12 months and its belief that the Reserve bank’s interest rate cuts are now over.

QBE Insurance Group Ltd (ASX: QBE)

The QBE Insurance share price is down 4% to $19.01. This follows the release of the insurance giant’s third quarter update this morning. Although QBE had a solid quarter and reaffirmed its guidance for FY 2026, it revealed that premium rate increases have softened. Commenting on its outlook, management said: “We are confident in achieving our outlook for the year. In the aggregate, Group claims are expected to track broadly to plan, as we focus on delivering consistent and resilient performance. Following meaningful first half global catastrophe losses, catastrophe experience in the second half has been more benign to date.”

The post Why Amcor, DroneShield, Harvey Norman, and QBE shares are falling today appeared first on The Motley Fool Australia.

More reading

• Why are QBE shares sinking 6% today?
• It’s time to buy: 1 Australian stock that hasn’t been this cheap in years
• 5 things to watch on the ASX 200 on Thursday
• How to retire early with ASX shares and the power of compounding
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has positions in and has recommended Amcor Plc and Harvey Norman. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When it comes to ASX financial stocks, most investors turn to Commonwealth Bank of Australia (ASX: CBA) shares.

And while this has been a successful move in recent years, there are concerns that the bank’s current valuation could limit returns in the medium term.

In light of this, investors might be better off turning to other ASX financial stocks for potential market-beating returns.

Which ASX financial stock?

Bell Potter thinks that COG Financial Services Ltd (ASX: COG) could be a top stock to buy now.

It is diversified conglomerate of distribution businesses across Australia, providing access to credit providers for yellow commercial goods (construction and earth-moving equipment).

In addition, Bell Potter notes that the company has some balance sheet funded direct originations, with a focus on capturing some of the overflow for non-prime chattel mortgages.

Why is it a buy?

The broker believes that the company is well-positioned for growth in the coming years. It said:

We provide building blocks for earnings growth from FY26-27 and incorporate revised interest rate expectations. Acquisitions should contribute +13% accretion, meaning we need to find +17% growth to hit +30% FY26. We think this is possible. Things continue to improve for COG, and now all three divisions are placed to have a positive impact.

FY25 NPATA had an implied -$0.5m headwind despite the broker footprint being unchanged. A rebound in volumes should be supportive, especially with Board experience. Normalisation alone would translate to +2% earnings uplift.

Big potential returns

According to the note, the broker has retained its buy rating and $2.70 price target on the ASX financial stock.

Based on its current share price of $2.09, this implies potential upside of 29% for investors over the next 12 months.

In addition, Bell Potter is expecting COG to pay a fully franked 7.9 cents per share dividend in FY 2026 and a 9.3 cents per share dividend in FY 2027. This represents dividend yields of 3.8% and 4.5%, respectively.

Overall, the broker feels that its shares are too cheap given its positive earnings growth outlook. Speaking about its buy recommendation, Bell Potter said:

We expect +20% EPSA growth from FY26-28. However, the forward multiple of 13x would indicate low appreciation for acquisition integrations, cyclical improvement for the divisions and further consolidation activity. To that end COG screens well in our opinion.

Overall, this could potentially make this ASX financial stock a better option than CBA shares in the current environment.

The post Forget CBA shares and check out this buy-rated ASX financial stock appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

S&P/ASX 200 Index (ASX: XJO) gold stocks are shining bright today.

In late morning trade on Thursday, the ASX 200 is up 0.3%.

And the benchmark Aussie index is getting plenty of help from the Aussie gold miners, with the S&P/ASX All Ordinaries Gold Index (ASX: XGD) up 1.7% at this same time.

Here’s how some of the leading ASX 200 gold stocks are tracking today:

• Northern Star Resources Ltd (ASX: NST) shares are up 2.7% at $27.47
• Newmont Corp (ASX: NEM) shares are up 3.1% at $138.42
• Ramelius Resources Ltd (ASX: RMS) shares are up 2.0% at $3.65
• Evolution Mining Ltd (ASX: EVN) shares are up 2.2% at $11.91
• Bellevue Gold Ltd (ASX: BGL) shares are up 2.9% at $1.29
• Perseus Mining Ltd (ASX: PRU) shares are up 2.0% at $5.61
• Vault Minerals Ltd (ASX: VAU) shares are up 558.9% at $4.98*
• Genesis Minerals Ltd (ASX: GMD) shares are up 1.5% at $6.72
• Westgold Resources Ltd (ASX: WGX) shares are up 1.1% at $6.07

(*If Vault Minerals’ 559% intraday share price gains seem extraordinary, well they would be, if not for the 1-for-6.5 stock consolidation taking effect today.)

Here’s what’s rekindling investors’ interest in the big Aussie gold producers.

Why are ASX 200 gold stocks outshining the market today?

The common thread helping lift all the gold miners today is another uplift in the gold price.

The yellow metal is currently trading for US$4,163 per ounce, up 0.8% since this time yesterday.

The gold price is now up 5.9% since the recent lows on 6 November. And investors are betting that bullion – and ASX 200 gold stocks – are likely to get a boost from looming interest rate cuts in the world’s largest economy.

Gold, which pays no yield itself, tends to perform better in low and falling interest rate environments.

And while rate cuts in Australia appear to be off the table for now amid resurgent inflation, the market is increasingly optimistic that the US Federal Reserve will deliver another interest rate reduction in December.

Economists at JPMorgan are among those who now expect the Fed to cut rates in December, pointing to recent dovish comments from Fed members, including John Williams, the president of the Federal Reserve Bank of New York.

In what would come as welcome news to investors in ASX gold stocks, JPMorgan expects the world’s most influential central bank to cut rates by 0.25% in December before delivering a final 0.25% cut in January.

JP Morgans’ chief US economist, Michael Feroli, said (quoted by Bloomberg):

We’re back to looking for a final cut in January. While the next FOMC meeting remains a close call, we now believe the latest round of Fedspeak tilts the odds toward the Committee deciding to cut rates in two weeks from today.

Stay tuned!

The post Why are ASX 200 gold stocks like Northern Star smashing the benchmark on Thursday appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
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• 5 things to watch on the ASX 200 on Wednesday
• Revealed: BHP and 4 other ASX 200 mining stocks rank among top global copper producers

JPMorgan Chase is an advertising partner of Motley Fool Money. Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended JPMorgan Chase. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Temple & Webster Group Ltd (ASX: TPW) shares have been hammered this week.

Investors have been selling the online homewares retailer’s shares after its strong growth so far in FY 2026 wasn’t quite as strong as the market was expecting.

One leading broker thinks the selloff has been an overreaction and believes it has created a buying opportunity for investors.

What is the broker saying?

Bell Potter notes that while Temple & Webster’s sales growth has slowed since the end of August, management has reaffirmed its growth targets for FY 2026. It said:

Temple & Webster (TPW) provided a trading update for the first ~20 weeks of FY26 (1- Jul to 20-Nov) at their AGM, with check-out revenue +18% on pcp easing off from +28% in Jul-Aug. Trading reflects some cyclical impacts after two consecutive years of 20-26% revenue growth, however the company’s growth targets unchanged at >20% growth.

FY26 EBITDA margins of 3-5% were reaffirmed, including ~4% post the entry investment into New Zealand. Key metrics, average orders values and repeat rates (~60%) have performed well, in addition to a strong cash position in excess of $150m.

And while Bell Potter believes its sales growth will be a touch short of target this year, it remains very bullish on Temple & Webster and its shares. It adds:

While we see some tailwinds related to the most recent Consumer Sentiment print, lag effects from concluded interest rate cuts to the household goods category and TPW’s increased focus into brand marketing ROI, we factor in a level of cautiousness considering the longer discounting cycle and sit slightly below TPW’s +20% expectations.

Temple & Webster shares tipped to rebound

According to the note, the broker has responded to the update by retaining its buy rating with a reduced price target of $19.50 (from $28.00). Based on its current share price of $14.06, this implies potential upside of almost 40% for investors over the next 12 months.

Commenting on its buy recommendation, the broker said:

Our PT decreases by 30% to A$19.50 (prev. A$28.00). Along with our earnings revisions, we reduce our target multiples by 25% to ~27x EV/EBITDA (prev. ~36x) on FY27e EBITDA and ~3x EV/Sales (prev. ~4x) on FY27e Sales (25:75 blend).

Our views are unchanged of TPW’s ability to outperform over the long term as market share capture in an expanded TAM is expedited with range, pricing/scale advantages, backed by a strong balance sheet (+$150m cash). Trading at ~2x EV/Sales post the ~40% correction in the share price from the recent peak, we see risk-reward heading into the Feb 1H result and continue to see a buying opportunity. Maintain BUY.

The post Should you buy Temple & Webster shares after the crash? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Temple & Webster Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group. The Motley Fool Australia has recommended Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

S&P/ASX 200 Index (ASX: XJO) stock Reece Ltd (ASX: REH) is charging higher today.

Shares in the plumbing parts company closed yesterday trading for $12.24. In early morning trade on Thursday, shares are changing hands for $12.60 apiece, up 2.9%.

For some context, the ASX 200 is up 0.2% at this same time.

Despite today’s boost – and the 18.7% gains achieved since last Wednesday’s close – the Reece share price remains down a sharp 50.8% since this time last year.

Those losses will have only been modestly dampened by the 18.4 cents per share in fully franked dividends the company paid eligible stockholders over this period. Reece shares currently trade at a fully franked 1.46% trailing dividend yield.

Now, here’s what’s happening today.

ASX 200 stock increases share buyback to $400 million

In October, Reece completed a $365 million off-market share buyback, with the company paying $13 per share. The buyback was funded with both cash and debt.

Today, the ASX 200 stock announced an on-market share buyback of up to $35 million. Management noted this is now at the upper limit of the buyback the company had previously announced.

The new $35 million buyback will also be funded via a mix of on-hand cash and existing debt facilities.

Commenting on the new buyback, Reece chair and CEO Peter Wilson said, “We have a well-defined capital allocation framework and continue to take a long-term approach to shareholder value creation.”

Wilson added, “We remain committed to maintaining a strong balance sheet with a conservative leverage ratio to fund future growth.”

The ASX 200 stock expects the on-market buyback to commence on or after 12 December. It will be conducted in the ordinary course of trading and could run for up to 12 months.

What else has been impacting Reece shares?

Reece shares have enjoyed a strong run since the company reported its September quarter results on 21 November.

Highlights included an 8% year-on-year increase in sales revenue for the three months to $2.41 billion. (Sales revenue was up 6% on a constant currency basis.)

“Sales were supported by network expansion over the past 12 months,” Wilson said.

Indeed, over the quarter, the ASX 200 stock added 10 new branches in the United States and five new branches in Australia and New Zealand.

But with costs rising, earnings came under pressure.

Reece reported an 8% year-on-year decline in earnings before interest, taxes, depreciation and amortisation (EBITDA) to $222 million.

“Costs remain elevated driven by network growth, ongoing investment in core capabilities and the impact of labour cost inflation in competitive markets, especially the US,” Wilson said.

The post Down 51% in a year, guess which resurgent ASX 200 stock is lifting off on $35 million buyback news appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

QBE Insurance Group Ltd (ASX: QBE) shares are on the move on Thursday.

In morning trade, the insurance giant’s shares are down 6% to $18.62.

Why are QBE shares sinking?

Investors have been selling the company’s shares this morning after it released its third quarter update.

According to the release, QBE’s gross written premium growth in the nine months to 30 September was 6% compared to the prior corresponding period.

Management notes that ex-rate growth of 5% remained in line with first half trends, underpinned by sustained momentum across International and North America.

QBE’s gross written premium growth included a drag of around ~US$250 million from the run-off of non-core lines in North America. Excluding this, ex‑rate growth was 7%, or 6% on further excluding Crop.

Premium rate growth softens

The company advised that its premium rate increases in the nine months to 30 September were ~1.5%. This growth rate is modestly below the first half result, driven predominately by commercial property lines.

Premium rate increases for the Group excluding commercial property and Lloyd’s segments remain in line with first half growth rates at ~4%. It also notes that rate adequacy remains supportive across the portfolio heading into the year ahead.

Claims update

Management believes it is well-placed to achieve its claims guidance for the full year. It said:

We are confident in achieving our outlook for the year. In the aggregate, Group claims are expected to track broadly to plan, as we focus on delivering consistent and resilient performance. Following meaningful first half global catastrophe losses, catastrophe experience in the second half has been more benign to date.

The net cost of catastrophe claims in the ten months to October is anticipated at around ~$700 million, which is below the allowance for this same period of ~$950 million. QBE’s allowance for the months of November and December totals ~$200 million. On the current trajectory catastrophe costs are likely to be comfortably below allowance for FY25, marking the third consecutive year of favourability in this regard.

It also highlights that based on available data, the FY 2025 Crop current accident year combined operating ratio is expected to be slightly better than plan.

This strong outcome reflects the impact of recent actions to reset its Crop strategy, with a focus on achieving better portfolio balance, and remediating the private product portfolio.

Outlook

QBE has reiterated its FY 2025 guidance. It expects constant currency gross written premium growth in the mid‑single digits and a group combined operating ratio of ~92.5%.

Looking to FY 2026, management is feeling positive about its outlook. It said:

With our portfolio in better balance, alongside improved breadth and visibility of earnings, planning for FY26 is well progressed. Profitability remains attractive across the majority of lines and the year ahead appears constructive for further growth, and a continuation of strong returns.

QBE currently expects a group combined operating ratio of ~92.5% again in FY 2026.

The post Why are QBE shares sinking 6% today? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Kiwi insurer Tower Ltd (ASX: TWR) has more than doubled its final dividend after reporting a record underlying profit.

The company’s unfranked dividend yield was already running at a generous 7.4% according to the ASX website; however, the company is looking like an even stronger dividend play after Thursday’s announcement.

Good numbers across the board

Tower said in a statement to the ASX that its underlying profit came in at a record NZ$107.2 million, up from $NZ$83.5 million the previous year, while net profit was NZ$83.7 million, up from NZ$74.3 million.

The company said the board had considered the strong financial results and decided to pay a final dividend of NZ16.5 cents, up from NZ6.5 cents for the same period the previous year.

Tower Chief Executive Officer Paul Johnston said the company had performed well:

This is an exceptional result, underpinned by Tower’s transformation, driven by investment in our digital platform and continued focus on underwriting discipline, technology, data, and efficiency. These actions demonstrate Tower’s commitment to delivering sustainable growth and building a resilient, customer-focused business for the future.

There was a caveat, however, with Mr Johnston saying that the company expected the conditions which underpinned the record results, including relatively benign weather, to normalise in the current financial year.

The company said it had increased its customer base 4% over the year to 318,000, with home insurance policies up 11%.

Cautious forecast on profit going forward

Tower said it expected its full-year results for the current year to drop back to be in the range of NZ$55 million to NZ$65 million, “assuming full utilisation of an updated NZ$45m large events allowance”.

The company said on Thursday that there were only two large events in FY25, which meant it only incurred NZ$7.2 million in large events costs, “allowing us to return NZ$30.8m after tax of our large events allowance to underlying NPAT”.

The company went on to say:

Benign weather, together with lower motor claims and prior-year targeted underwriting actions – such as tightening our risk appetite for high-theft-risk vehicles – also contributed to a reduction in NZ business-as-usual claims, from 57,783 in FY24 to 56,825 in FY25, while customers and policy count grew in the year. While policy and customer volumes have continued to grow, average premiums have reduced. This is due to a higher proportion of lower-risk new policies, consistent with Tower’s risk-based pricing approach, and more competitive pricing in the New Zealand market.

Tower’s ex dividend date has been set for 14 January, with the dividend to be paid on 29 January.

The post This insurance company has more than doubled its final dividend on record results appeared first on The Motley Fool Australia.

More reading

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• Why are QBE shares sinking 6% today?
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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Bendigo and Adelaide Bank Ltd (ASX: BEN) shares closed 0.2% higher on Wednesday afternoon, at $10.21 a piece. In November so far, the shares have declined by 20.54% and are now 23.23% lower than this time last year.

What happened to Bendigo Bank shares?

The bank reported its first-quarter results in early November. Investors weren’t impressed. Bendigo Bank reported a 3.2% drop in cash earnings after tax for the first quarter of FY26. This was also a 3.2% drop in the average quarterly earnings for the H1 FY25. Its residential lending was also 5.6% lower over the quarter. Although there was better news on the business lending front, with growth of 2.9%.

Earlier this week, the bank’s shares were hammered again. This time, the sell-off followed the results of an independent Deloitte investigation into suspicious activities at one of its branches between 1 August 2019 and 1 August 2025. Bendigo Bank engaged Deloitte to conduct the investigation after it identified and reported suspicious activity.

The Deloitte review concluded that deficiencies in the bank’s approach to identifying, mitigating, and managing money laundering and terrorism financing risk existed throughout the six-year period.

And Deloitte discovered that these deficiencies weren’t limited to the single branch either. The report identified weaknesses and deficiencies across many key aspects of Bendigo Bank’s Anti-Money Laundering and Counter-Terrorism Financing risk management approaches.

In response, the board said it is very disappointed with the findings. It added that it is fully committed to ensuring that the bank undertakes necessary enhancements to ensure it is compliant with its obligations.

Are they a buy, hold or sell? 

TradingView data shows that analysts are pretty bearish on Bendigo Bank shares. Out of 14 analysts, 8 have a hold rating and 5 have a strong sell rating.

The average target price for the stock is $10.86, which, after the latest price plunge, represents a potential 6.37% upside over the next 12 months. Some analysts believe the shares could drop to $7.39, implying a 27.62% downside for investors.

The team and Macquarie have assigned an underperform rating and a $10.50 price target to the shares. This implies a potential 2.84% upside is ahead for the bank. The broker said that it’s not overly impressed with Bendigo Bank’s latest results. The team said its trading update was “weak” and costs were also materially higher. The team said the results missed consensus expectations by 8%.

My take? I think Bendigo Bank shares are probably approaching the bottom. I’d sit tight for now.

The post Bendigo Bank shares crash 20% in November: Are they a buy, hold or sell? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you are wanting exposure to the defence sector, then it could be worth considering Electro Optic Systems Holdings Ltd (ASX: EOS) shares.

That’s because if Bell Potter is on the money with its recommendation, it could be destined to deliver huge returns for investors over the next 12 months.

What is the broker saying?

Bell Potter notes that EOS has just completed the acquisition of the MARSS Groups drone interceptor business.

While it will take time before there is a commercial product, the broker believes this is a good move by management given recent defence trends. It said:

EOS has acquired MARSS Groups drone interceptor business for an upfront consideration of €5.5m (A$10m) funded via existing cash reserves. Interceptor drones are an emerging hard-kill counter-unmanned aerial systems (C-UAS) technology. EOS expects 12-24 months of further development before full commercial launch, with ongoing investment of up to A$10m over the next three years, with potential for customer development funding.

Given recent political/industry attention and contract awards for this vertical we view this acquisition favourably, further leveraging EOS to the global C-UAS thematic. We believe EOS positioning the product as a lowest-cost solution is appropriate but expect competitive intensity to increase.

Bell Potter believes that interceptor revenue will start to be generated in FY 2027, and sees potential for double-digit growth from the business in the years that follow. It adds:

We have assumed an incremental $6m of Interceptor revenue in CY27e and expect this to grow at 10% thereafter, a conservative assumption, in our view.

Should you buy EOS shares?

While the broker thinks that a peace deal between Ukraine and Russia could weigh on its share price in the near term, it doesn’t feel a deal will impact its growth forecasts. As a result, it is urging investors to pick up EOS shares today. It said:

We expect a Ukraine peace deal to weigh negatively on share price sentiment in the short term but would likely see no change to our forecasts given current global defence spending rhetoric.

We retain our Buy rating and downgrade our TP to $8.10. EOS is positioned as a market leader in C-UAS solutions and is leveraged to increasing budget allocations to C-UAS technologies. We see positive news flow over the next 6 months stemming from C-UAS and RWS contract awards. Following the award of the A$20m Slinger contract in Nov-25, we estimate that our CY26e revenue forecast is 59% secured by announced contracts. We see material upside to our CY27e and beyond forecasts if at least 1 laser contract is awarded in CY26e.

As mentioned above, Bell Potter has a buy rating and $8.10 price target on EOS shares. This implies potential upside of 75% for investors over the next 12 months.

The post Why EOS shares could rise 75% in just a year appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The share price of Lendlease Group (ASX: LLC) has been exploring new depths this month. Lendlease shares have lost another 9.55% and are valued at $5.21 apiece at the time of writing.

The property developer’s stock is hovering near year lows and trades at more than 60% below its value from 5 years ago.

Prestigious projects

Lendlease was once considered a global powerhouse in property development and urban regeneration. Now, the sustained weakness has left investors questioning whether the worst is finally over or if more pain lies ahead.

The real estate group designs, builds, and manages large commercial, residential, and infrastructure projects. Its fingerprints are on some of the world’s most prestigious precincts, such as Sydney’s Barangaroo and the Elephant & Castle redevelopment in London.

Turbulent UK exit

A series of earnings downgrades, budget blowouts, delayed project deliveries, and rising interest rates have battered the company, Lendlease shares, and investors’ sentiment.

Lendlease also made a costly and turbulent exit from the US and UK property markets. The real estate shares dropped more than 17% in early April this year on completion of the sale of its UK Construction business to Atlas Holdings. The reason for the fall, was that investors were starting to have increased doubts about Lendlease’s ambitions.

Investors slowly started buying back into the property developer’s shares after it officially signed a joint venture agreement with the Crown Estate in the UK in May. However, the disposal of assets and stalled developments have reduced stabile earnings, while restructuring costs continue to dampen profitability.

Cleaner balance sheet

Despite its troubles, the property and construction company still owns valuable assets and long-standing relationships with governments and institutional investors. And after years of restructuring, the balance sheet looks cleaner with more cash and fewer risk-heavy assets.

The company expects FY26 to be a transition year, as it will continue to simplify its business. It anticipates a lower earnings contribution from major project completions, but it plans for a sharp rebound in earnings from FY27.

Growing funds under management

Looking further ahead, Lendlease has a strong pipeline of new development opportunities, including $25 billion in bids and plans to secure over $10 billion in FY26. Progress in international funds management, ignited by new partnerships, is set to support growth in funds under management over the medium term.

Execution remains the biggest challenge. Multi-billion projects take years to complete, making profits lumpy and dependent on external market conditions. Rising construction costs, labour shortages, and bureaucracy continue to threaten Lendlease margins.

Reputational fatigue

Lendlease also battles with reputational fatigue. Many fund managers are tired to hear yet ‘another turnaround scenario’.

Analysts are also divided. Most acknowledge Lendlease shares look cheap, after such a severe sell-off. Some brokers do see upside from current levels, but the average 12-month target price of $5.80 sits modestly above today’s share price.

This suggests an 11% upside and implies cautious optimism, rather than conviction.

The post Are Lendlease shares a bargain after hitting fresh lows? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.