Goodman Group Ltd (ASX: GMG) shares have descended from their previous highs and are now down more than 5% in the past month of trade.
Shares in the property giant are currently swapping hands at $32.81, having reached yearly highs of $31.17 apiece in mid-July.
Has the trend finally reversed for Goodman shares in 2024? Or, is this the right time to think about the real estate stock for your porftolio?
Let's see what the experts think.
Why the decline in Goodman Group shares?
The recent decline in Goodman Group shares doesn't appear to be linked to a specific event. It could be attributed to broader market volatility rather than any company-specific issues.
But despite the drop, Goodman posted a solid set of FY24 accounts last month.
It reported a 15% increase in operating profit to $2.05 billion and a 14% rise in operating earnings per share (EPS) to 107.5 cents. These figures exceeded the company's own upgraded guidance.
Goodman's development pipeline is also a growth driver moving forward. The company has $13 billion worth of projects in the works, including a focus on data centres – a high-growth segment right now.
Meanwhile, it finished the period with $79 billion in assets under management, with more than 98% of its entire portfolio occupied at the time.
Brokers at Citi were impressed with the FY24 numbers and subsequently rated the stock a buy with a $40 valuation
This implies 22% upside potential at the time of writing for Goodman Group shares. If this were to occur, it would double the long-term annualised return of the broader market, which is about 10%.
Growth on the horizon
Looking ahead, Goodman has provided guidance for a 9% increase in operating EPS for FY25, targeting 117.2 cents.
However, as my colleague James recently highlighted, Goodman's history of conservative guidance and subsequent upgrades means there's a possibility that the company could once again exceed expectations.
Meanwhile, according to my colleague Bron, the property giant has nearly 40% of its current works in progress tied up in data centres. Citi notes this in its bullish investment thesis on Goodman.
This is noteworthy in my view. The Australian data centre market is projected to grow by 5.1% each year until 2029, according to Statista.
Goodman has a global data centre portfolio with sites in Tokyo, Sydney, Hong Kong and Frankfurt.
In its half-year results in February, the company suggested it had further capacity "to capture strong demand for new, high-value, high-tier data centres in supply constrained locations".
This could impact Goodman Group shares, based on what we've seen happen this year.
Goodman Group shares takeaway
With Goodman Group shares down 5% over the past month, this hasn't changed the opinion of experts who are bullish on the stock.
Zooming out, Goodman is up 30% year to date.
