What is Happening to the Lend Lease Share Price?

Lend Lease
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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.

Lend Lease Share Price

Source: bigcharts

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.

If you’d like to know more, click here.

Greg Canavan

Editor, The Daily Reckoning

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Greg Canavan
Greg Canavan is the Managing Editor of The Daily Reckoning and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails. For more on Greg go here.
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