The Goodman Group Limited (ASX: GMG) share price may have some downside ahead if the analysts at Goldman Sachs are on the money with their analysis and valuation.
According to a July 24 research note out of the investment bank the $28 billion industrial property business is "materially overvalued" at $15.34 per share this afternoon. "In particular given that the key drivers of its incremental FY19-21E earnings growth are performance fees and super-normal development profits, as opposed to the recurring fee streams that drove its earnings in the past," the analysts note.
As at March 31 2019 the company had $44.1 billion in assets under management and a "development pipeline" worth $2.4 billion. It'a also forecasting operating earnings per security of 51.1 cents per share for FY 2019 to put it on 30x its own forecast for earnings. This looks expensive by historical standards and given it's a commercial property management group.
Other fast-rising property management groups favoured by dividend-seeking investors include Mirvac Group (ASX: MGR) and DEXUS Property Group (ASX: DXS).
