Why Goodman Group is up 51% this year

Property group trounces the index so far this year

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published October 5, 2012 4:22 pm AEST

Property company Goodman Group (ASX: GMG) has risen 51% to $4.29 so far during 2012, making it one of the best performers in the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO), and comprehensively outperforming the index, which has risen just 10.7%.

Goodman Group is an integrated commercial and industrial property group that owns, develops and manages real estate including warehouses, business parks and offices globally. The company also offers a range of investment property funds.

During February, Goodman Group reported its six monthly results, with operating profit coming in at $229 million, an increase of 34% over the previous year. Operating profit is before property revaluations and other non-cash items. The company also announced it was on track to increase full year earnings by 8%. Distributions (dividends) increased 20% over the prior corresponding period.

In June, the company announced that it had entered the US market through a partnership with California based Birtcher Development and Investments and was targeting investments of up US$800 million, mainly in key North American logistics and industrial property markets.

During August, Goodman reported an operating profit of $463 million for the full 2012 financial year, a 21% increase over 2011. Earnings per share increased, as previously announced, by 8% to 30.5 cents. The company also forecast that it was positioned to deliver an operating profit in the 2013 financial year of $524 million, equating to earnings per share of 32.3 cents.

Goodman's next half year results are due to be published around the middle of February 2013.

With a prospective P/E of around 13.2, Goodman is trading at a discount, compared to competitors Challenger Diversified Property (ASX: CDI) on a P/E of 17.1, and BWP Trust (ASX: BWP) on a P/E of 14.6.

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Motley Fool writer/analyst Mike King doesn't own shares in any stocks mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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