After a tough time, analysts expect a big earnings bounce for this FTSE 100 stock

Will earnings really double by 2026? Well, that’s what the City analysts think could happen with this FTSE 100 company.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The share price of today’s FTSE 100 pick is down 30% from its peak of late 2021.

Underlying earnings slumped in 2022, before regaining a little in 2023.

But now, forecasts suggest earnings per share (EPS) should more than double by 2026, which would drop the price-to-earnings (P/E) ratio to only 8.6.

Should you invest £1,000 in Tritax EuroBox right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Tritax EuroBox made the list?

See the 6 stocks

That’s low by FTSE 100 standards, so which company is it I’m talking about? It’s LondonMetric Property (LSE: LMP).

Created with Highcharts 11.4.3LondonMetric Property Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Property slump

Like with other stocks in similar businesses, the slowdown is behind the recent pain. But also like related stocks, I think the market overreacted and pushed the shares down too far.

Markets do that a lot. And it leads to the kind of uncertainty that can have big City investors biting their knuckles. But I love it, because it can give patient private investors like us the chance to buy in cheap.

But the low P/E valuation isn’t the thing I like most about LondonMetric. No, that’s the dividend yield. It’s currently forecast at 5.2%, and it kept it going through the past few tough years.

This is the kind of business that can do that, and can even out its dividends even if profits are up and down in the short term.

Real estate

The company invests in and develops a range of commercial real estate, including retail parks, distribution facilities, offices… and other things, including some residential property. And it gets its income mostly from rental leases.

It’s quite easy to see how such a business could hurt during a global pandemic and lockdowns. And again when inflation soars, pushing interests rates through the roof.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

More trouble

Even though forecasts show things looking up, it doesn’t mean LondonMetric is in the clear now.

No, real estate investment trusts (REITs) often run on high debts to buy property. That’s more expensive to do now. Couple that with retailers and other business customers facing a squeeze, and it’s clear that an economic downturn could hit a firm like this harder than many.

In the year to March 2024, LondonMetric’s gross debt just about doubled, to nearly £2.1bn. But it put its property asset values at around three times that following a couple of acquisitions.

And, more importantly, we must be fast approaching the other side of high interest rates now. We might only see one cut this year. But it would be a nice start.

Cash ahead

The dividend is by no means guaranteed. And I really think it’s what keeps most shareholders aboard. We still face property risk. And should the company not be able to keep the dividend cash going one year, I reckon we might see a share price collapse.

But at FY time, CEO Andrew Jones spoke of “confidence to increase our Q1 dividend for FY 2025 by 19%“.

He added: “We are fully aligned to shareholders with a shared mission and will be ruthlessly efficient in how we operate our business and how we allocate capital in our quest towards dividend aristocracy.

Dividend Aristocracy has to be worth considering, I reckon.

Should you buy Tritax EuroBox shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended LondonMetric Property Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »