LondonMetric Property (LSE:LMP) Could Be 18% Undervalued On Its Long Term Rental Story

LondonMetric Property (LSE:LMP) is back in focus after discounted cash flow work suggested the shares trade about 18% below intrinsic value, despite a 21.2% total return over the past three years.

Over the past year, LondonMetric Property’s share price has drifted, with the year to date share price return down 7.7% and the 90 day share price return down 8%. However, the 3 year total shareholder return of 21.2% points to better longer term momentum.

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For LondonMetric Property, the recent drift in the share price sits awkwardly against its solid three year return record. Is this move really about the underlying rental engine, or is it simply sentiment resetting the sticker price and creating a gap to estimated value?

Most Popular Narrative: 13% Undervalued

On the current narrative, LondonMetric Property screens below an estimated fair value of £2.00 per share against a last close of £1.74. This frames the recent share price drift as a potential valuation gap rather than a verdict on the long term rental story.

The focus on long term themes tied to evolving consumer habits, such as instant delivery, convenience grocery formats and spending on experiences through budget hotels and theme parks, may keep occupancy and pricing power resilient over time. This could support revenue and earnings resilience that contradicts expectations for a flat share price.

See why 2 investors see LondonMetric Property as 13% undervalued.

Result: Fair Value of £2.00 (UNDERVALUED)

Still, LondonMetric Property’s exposure to consumer facing tenants and its reliance on debt funding mean any hit to occupier demand or higher interest costs could quickly challenge this undervaluation story.

Find out about the key risks to this LondonMetric Property narrative.

Next Steps

Mixed messages in the LondonMetric Property story so far. If the balance between risk and potential upside feels tight, move quickly and review the 4 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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