Why the Lendlease share price has rocketed 10% higher today

The Lendlease Group (ASX: LLC) share price has surged 10% this morning despite a soft full-year earnings result headlined by a 41% profit decrease – but why?

| More on:
a woman

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 Lendlease Group (ASX: LLC) share price has been a strong performer within the S&P/ASX 200 (INDEXASX: XJO) index so far this year, climbing 35% higher in less than 8 months.

But why has the Lendlease share price surged 10% higher today, despite a soft full-year earnings result this morning?

What were Lendlease's full-year highlights?

Lendlease released its full-year results this morning and announced net profit had fallen 41% lower to $467.7 million during the year. Even revenue fell lower, with total sales coming in 0.1% lower on the prior corresponding period (pcp) at $16.54 billion, with return on equity (ROE) totalling 7.4%.

The property developer's Metro Tunnel and WestConnex projects took a hit to the company's profits, with delays and cost overruns weighing on profitability and growth. Lendlease also announced a 5 cents per share cut in its final dividend following the weaker result.

However, it wasn't all doom and gloom for Lendlease shareholders, with the Aussie property group noting a record pipeline of development projects and significant liquidity to capitalise on available opportunities.

So, why did the Lendlease share price surge this morning?

Despite the soft earnings result, the Lendlease share price is currently trading 10% higher – but why?

Amongst the full-year announcement, Lendlease did announce that it is selling its troubled engineering division, which may have boosted investors' hopes about the company's future profitability and growth prospects.

The Aussie property group took a $500 million hit from the troubled segment in its Brisbane and Sydney-based projects.

The move comes after the group's November 2018 decision to scrap a planned $500 million bond issuance after a slowdown on its NorthConnex project and further engineering segment troubles.

Foolish takeaway

Overall, the Lendlease full-year earnings result was far from the most impressive I've seen, but investors seem buoyed by the strong pipeline and plans to sell the engineering group.

The Lendlease share price has performed well in 2019, after having plummeted lower in the second half of 2018, and could well serve as a warning sign for other Australian real estate companies in August.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Share Gainers

3 ASX All Ords shares up 50%+ in March

These ASX shares have been on fire this month. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

Why Mesoblast, Patriot Battery Metals, Sigma, and Zip shares are pushing higher

These shares are having a good session on hump day. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was back to earth for ASX shares this Tuesday.

Read more »

Two happy scientists analysing test results.
Healthcare Shares

Mesoblast share price rockets 36% on breaking FDA news

ASX investors are sending the Mesoblast share price soaring following promising FDA news.

Read more »