Goodman Group (ASX:GMG): Valuation Check After A$14 Billion European Data Centre Partnership With CPP Investments

Goodman Group (ASX:GMG) has just locked in a 50:50, A$14 billion European data centre partnership with CPP Investments, targeting Frankfurt, Amsterdam and Paris at a time when cloud and AI driven demand continues to climb.

See our latest analysis for Goodman Group.

That announcement helps explain why momentum has swung back in Goodman’s favour, with a 7 day share price return of 10.36 percent and a three year total shareholder return of 88.13 percent despite a softer year to date.

If Goodman’s data centre push has caught your eye, this could be a good moment to scan other infrastructure like plays across aerospace and defense stocks for ideas beyond traditional real estate.

Yet with a softer year to date, a double digit three year return and a share price still below analyst targets, investors now face the key question: is Goodman undervalued or already priced for its next leg of growth?

Most Popular Narrative: 15.1% Undervalued

With Goodman’s fair value pinned at about A$37.26 versus a last close of A$31.65, the most followed narrative argues the gap reflects future earnings power.

Analysts are assuming Goodman Group's revenue will grow by 7.4% annually over the next 3 years.

Analysts assume that profit margins will increase from 48.9% today to 84.0% in 3 years time.

Read the complete narrative.

Curious how steady, mid single digit growth can still justify a premium multiple usually reserved for fast movers in other sectors? The narrative leans on a radical shift in profitability, bold assumptions about future earnings scale and a valuation framework that treats Goodman less like a landlord and more like a critical digital infrastructure platform. Want to see exactly how those moving parts stack up into that fair value?

Result: Fair Value of $37.26 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this upbeat view still hinges on executing capital intensive data centres on time and on budget, and maintaining strong tenant demand in a cyclical market.

Find out about the key risks to this Goodman Group narrative.

Another View: Rich On Earnings

Not everyone sees Goodman as a bargain. On earnings, the stock trades at about 38.8 times compared with 16.7 times for global Industrial REITs, peers at 24.7 times and a fair ratio of roughly 20 times, raising the risk that sentiment, not cash flows, is doing the heavy lifting.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Goodman Group Narrative

If this perspective does not quite match your own, or you prefer digging into the numbers yourself, you can build a personalised view in minutes: Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Goodman Group.

Ready For Your Next Investing Move?

Goodman might be your starting point, but your next smart move could be hiding in plain sight, and you will not want to miss it.

• Capitalize on overlooked value by scanning these 904 undervalued stocks based on cash flows that pair solid fundamentals with attractive cash flow based pricing.
• Ride the next wave of innovation by targeting these 24 AI penny stocks positioned to benefit from rapid adoption of machine learning and automation.
• Lock in potential income streams by reviewing these 10 dividend stocks with yields > 3% that combine resilient businesses with dependable, above average yields.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com