Can GPOR’s Share Price still be justified by its Earnings Growth?

Great Portland Estates header image
Credit: Great Portland Estates

FTSE 250 company Great Portland Estates (GPOR.L) is a property investment and development group owning £2.8bn of real estate in central London. The group proactively manages its portfolio, flexing activities in tune with London’s property cycle to deliver long-term out-performance. GPOR creates in-demand spaces that people want to be part of; helping occupiers, local communities and the city to thrive.

On July 5th, 2018, GPOR published a trading update for the quarter to 30 June 2018, highlighting another quarter of positive operational activity with healthy leasing, ahead of ERV (Estimated Rental Value), and encouraging occupier interest across the group’s three newly committed development schemes which are already 11% pre-let. GPOR said it continued to attract occupiers, with £4.4m of lettings currently under offer at a 4.4% premium to March 2018 ERVs. CEO Toby Courtauld said that despite the ongoing economic and political uncertainty…“GPE is in great shape with enviable long-term potential: five years of net sales activity gives us unprecedented financial capacity even after returning more than £400m to shareholders; our investment portfolio is well let, off low average rents and we are capturing its reversionary potential; our committed development programme is progressing well; our exceptional income-producing development pipeline offers more than 1.3m sq ft of flexible future growth potential; and we have a first-class team ready to capitalise on our many opportunities.”

Toward the end of May 2018, London property group GPOR flagged up as an opportunity for VectorVest members in the form of a Relative Value (RV) flag. Since moving above 1, the RV, an indicator of long-term price appreciation potential, has continued to climb, and today logs GPOR at 1.51, excellent on a scale of 0.0 – 2.0. Added to this the company logs a GRT (Earnings Growth Rate) of 32%, which also rates as excellent on the VectorVest stock and portfolio management system. Trading today at 711p, GPOR still offers plenty of upside against a current VectorVest valuation of 1,024p.

VectorVest chart for GPOR
Click or tap to enlarge.

A daily candlestick chart of GPOR.L is shown above. The green line above the price shows the revaluation of the company as earnings per share rose during June 2018. The revaluation is a strong leading indicator of a move in the share price. At present the share is charting a “flag” pattern and a break above the trendline defining the pattern plus a VectorVest Buy signal should precede a strong upward move.

Summary: Although there have been several recent indicators that some London property companies are feeling the pinch, (in relative terms of course), GPOR has consistently shown that by successfully managing risk, it can continue to deliver on its strategic priorities. The group is solely focussed on central London, a market that it knows inside out, which means it is better placed to evaluate changing conditions, adjust activities and unearth opportunities that others may miss. These fundamentals, coupled with a bullish charting configuration, ensures that unlike many of its peers, GPOR makes the grade. Traders and investors who enjoy turnaround situations should wait for any move to be confirmed by a VectorVest Buy signal.

 

David Paul

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