Can the e-commerce boom keep helping the Goodman (ASX:GMG) share price?

Goodman shares keep rising as the e-commerce boom continues.

| More on:
real estate asx share price represented by growing coin piles next to wooden house

Image source: Getty Images

The Goodman Group (ASX: GMG) share price has risen by around 24%. Can the e-commerce boom continue to help the business?

In-fact, Goodman shares have gone up by around 14% in the last month alone.

Many brokers believe that the business is still a buy, despite its strong run up of value. For example, Credit Suisse thinks it’s a buy with a price target of $25.01.

The brokers at Macquarie Group Ltd (ASX: MQG) believe that Goodman is a buy with a price target of $26.45.

Morgan Stanley thinks it’s a buy with a price target of $26.50 for the Goodman share price.

All of those brokers recently updated their thoughts on the real estate giant after the latest quarterly update from Goodman.

Financial strength and growth in FY22 Q1

Goodman said that at 30 September 2021, its total assets under management (AUM) had grown to $62 billion.

The business experienced 3.2% like for like net property income (NPI) growth in its managed partnerships. The occupancy across the partnerships was 98.4%. The development pipeline of work in progress (WIP) had grown to $12.7 billion.

Goodman noted that COVID-related disruptions in FY22 have been managed so that they have had less impact on the full year projections than initially assumed.

In addition, given the strength of its development projects, leasing success and the stronger-than-expected performance of its partnerships, the outlook for FY22 is ahead of previous forecasts.

It’s now expecting operating earnings per share (EPS) growth to be more than 15%.

E-commerce boom

Goodman made a number of observations that explained why it is seeing such a strong operating environment, which may be helping the Goodman share price.

The real estate business said that well-located industrial real estate is recognised as essential infrastructure for the digital economy and making it a highly sought-after asset class. Recent market transactions and strong demand is driving asset values higher. Combined with “significant” rental growth, this is expected to support further valuation growth similar to FY21.

By June 2022, Goodman is expecting its AUM to rise to around $70 billion. Investors often like to think about the upcoming financial year when considering the Goodman share price.

The business also said that the significant level of customer demand, combined with supply restrictions in its markets, is creating a shortage of available space. It’s focusing on infill markets, to deliver sustainable opportunities for customers and investors, while securing cashflow growth for the long-term.

The boss of Goodman, Greg Goodman, said:

The results of the deliberate positioning of our portfolio over the last decade to adapt to and leverage the changes in the digital economy, are now being realised. Customer demand for high-quality properties close to consumers has never been greater.

High utilisation of space, barriers to entry and limited supply in our markets are underpinning occupancy and cash flow growth in our portfolio, with strong rental growth occurring globally…We remain focused on regeneration of existing land and buildings in our portfolio, supporting future development work and reducing our impact on the environment.

The value added to our properties through intensification of use, and strong investor appetite for logistics real estate will drive further positive revaluation outcomes in FY22.

Valuation of the Goodman share price

Using Morgan Stanley’s estimates, Goodman is valued at 32x FY22’s estimated earnings.

Should you invest $1,000 in Goodman right now?

Before you consider Goodman, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Goodman wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

best asx shares represented by best in show ribbon
Broker Notes

3 ‘champion stocks’ for ASX investors in 2022

If you’re a fan of buy and hold investing, then you may want to look at the “champion stocks” listed …

Read more »

a group of stockbrokers sit in a room with a computer and writing on a wall in chalk indicating calculations and graphs while discussing something on the computer screen.
Broker Notes

Here’s what 67% of brokers think of the current IAG (ASX:IAG) share price

Key points The IAG share price traded up today IAG has made a solid start to the year having rallied …

Read more »

A female financial services professional with a manicured black afro hairstyle turns an ipad screen to show a client across the table a set of ASX shares figures in graph format
Bank Shares

Goldman tips Bank of Queensland (ASX:BOQ) share price to rise 25%

If you’re interested in gaining exposure to the banking sector, then it could be worth considering Bank of Queensland Limited …

Read more »

surprised asx investor appearing incredulous at hearing asx share price
Broker Notes

Top broker sees 43% upside for the Westpac (ASX:WBC) share price

Key points The Westpac share price is down 24% from its highs Morgans believes this has created a buying opportunity …

Read more »

an arrow with sparks shoots up
Consumer Staples & Discretionary Shares

Why is the Dusk (ASX:DSK) share price firing 15% higher today?

Key points Dusk shares are bouncing off a 3-month low today. Shares are soaring 15% into the green at the …

Read more »

Green keyboard button saying buy stock
Broker Notes

Brokers name 3 ASX shares to buy today

It has been another busy week for Australia’s top brokers. This has led to the release of a large number …

Read more »

ASX miners crash opportunity broker buy asx shares represented by investor throwing hands up towards icons of buy and sell broker upgrade buy
Broker Notes

Time to sell? Macquarie just downgraded these 3 ASX shares from buys

Key points Macquarie comes out with a list of downgrades today The 3 ASX shares are all concentrated in resources …

Read more »

a group of business people sit dejectedly around a table, each expressing desolation, sadness and disappointment by holding their head in their hands, casting their gazes down and looking very glum.
Broker Notes

Analysts give their verdict on the Kogan (ASX:KGN) share price

Key points Kogan share price hit a new 52-week low on Friday In response to its half year update, brokers …

Read more »