Three Property Plays Trading At Rock Bottom Valuations: LSL Property Services plc, Countrywide PLC, Foxtons Group PLC

UK property has been one of the hottest investments over the past few years and the market has recently surged back to pre-crisis levels. However, recent concerns over high valuations have sent shivers through the industry and investors have reduced their exposure to the sector. 

But for canny investors this has presented an opportunity. Companies such as LSL Property Services (LSE: LSL)Countrywide (LSE: CWD) and Foxtons (LSE: FOXT) are now currently trading at rock bottom valuations, despite their lofty growth forecasts. 

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LSL Property Services released its half-year results this week and they were rather impressive. The company reported a pre-tax profit of £31.4m for the first six months of the year, compared with £8.4m a year ago. Overall revenue jumped 18% to £139.8m, thanks to a strong performance at the company’s estate agency division. 

Some of LSL’s strong performance can be attributed to its lettings division and financial services arm. Lettings revenue rose 12% to £27.7m during the first six months of the year, while financial services revenue grew 27% to £19.9m. Management also revealed that during the period, the company signed a multi-year contract with Barclays to provide surveying services for the lender until 2019. LSL did not reveal how much it was set to make from this contract.

City analysts currently expect LSL to report earnings per share growth of 28% this year, which puts the company on a forward P/E of 11. The City has also pencilled in a 5.8% dividend yield for this year. 

housesFiring on all cylinders 

Like LSL, Countrywide is firing on all cylinders. At the end of July the company reported a blow-out set of first half results, revealing a pre-tax profit of £39m, compared to a loss of £1.4m as reported last year. Additionally, revenue for the first half of the year increased by a third compared to the year ago period, up to £326m from £252m. 

And this rapid growth is set to continue, with City analysts expecting Countrywide to report earnings per share growth of 63% this year, putting the company on a forward P/E of 12.9.

Moreover, the City currently has 30% earnings per share growth pencilled in for 2015, which means that Countrywide is currently trading at a 2015 P/E of 10.1. Analysts expect the company’s shares to support a dividend yield of 5.6% next year. 

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Leading London estate agent, Foxtons is not as cheap as its two peers above. However, the company does offer growth at a reasonable price. Indeed, Foxtons’ earnings are set to grow at around 20% per annum for the next few years and the group’s dividend yield is expected to rise at a similar rate. 

City figures current suggest that Foxtons is trading at a forward P/E of 16.2% for full-year 2014 and a forward P/E of 13.4 for full-year 13.4. Actually, with earnings per share growth of 21% expected during 2015, Foxtons is currently trading at a PEG ratio of 0.6. Analysts currently expect Foxtons’ shares to support a dividend yield of 4.2% during 2015.

Don't get caught out 

However, some analysts are concerned that the UK property market could be overheating.

If the market suddenly turns around, the last thing you want to do if it does is get caught by surprise. With this in mind the Motley Fool's top analysts have put together this free report entitled "The Motley Fool's Three Shares To Beat Property".

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.