The Motley Fool

Why the Lendlease share price has rocketed 10% higher today

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.

NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!….

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

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.