What Does Lend Lease Do?
Lend Lease [ASX:LLC] is a diversified property development company. It designs, builds, funds and owns a range of property and infrastructure developments, both in Australia and overseas. More importantly, it owns one of the largest residential land banks in Australia. It develops this land when demand is strong, and thus benefits from an upswing in the housing cycle. It is also a major development of residential apartments.
What’s Happening to the Lend Lease Share Price?
Since the start of the year, the Lend Lease share price has been weak, falling from $14.40 to around $12. That’s a 17% fall in just over a month. You can see this share price weakness in the chart below.
It is always worth looking at a share price chart before you invest. It tells you a lot. In this case, the Lend Lease share price has been in a downtrend since the middle of 2015.
The November/December 2015 rally wasn’t enough to end the downtrend, and it’s reasserting itself in 2016. That’s reason enough to avoid the stock for now.
What Now for LLC?
The share price action is telling you to watch out for some bad news. LLC carries risk on its apartment construction. There is increasing concern that many buyers who put down a deposit on a new apartment last year won’t want to, or won’t be able to settle when the time comes. This could leave LLC exposed.
LLC trades on a P/E ratio of just 10 times 2016 earnings estimates. Some consider it cheap but the price action tells you to be wary of a profit downgrade, or weaker than expected future earnings.
Never assess a stock’s fundamentals without looking at the chart too. Combining fundamental analysis with charting can yield powerful results.
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Editor, Markets and Money