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Legal & General Share Price Appears Cheap by About 61.4%

ftse 100

The Legal & General share price has done relatively well in the past few months. The LGEN stock is trading at 281p, which is close to its all-time high. The stock has jumped by more than 135% from its lowest level in March last year. 

Legal & General is one of the biggest diversified financial services companies in the UK. The company offers investments, pensions, and insurance services to millions of customers in the country. The firm is also one of the biggest investors in the country. 

The most recent results showed that its operating profit rose by 14% in the first half of the year to more than 1.079 billion pounds. The firm made 946 million pounds in the same period in 2020. Its earnings per share rose by 21% to 17.78p while its profit after tax rose to moe than 1 billion.

This performance has pushed more investors to pile into the company. In a note this week, analysts at Barclays said that the company has a strong ability to deliver to investors. They said:

“The macroeconomic and investor landscapes are changing as demand for green assets rapidly increases. We believe that Legal & General (L&G) is fast becoming a group driven not only by the supply of life liabilities but increasingly also by demand for its unique asset generation abilities in L&G Capital.”

Most analysts are bullish about the Legal & General share price. At the same time, a DCF valuation shows that despite the recent gains, the company was trading at a 61.4% discount as shown below. The company’s earnings are expected to grow by 3.4% this year while it pays a reliable dividend yield of more than 6%.

The daily chart shows that the LGEN share price has been in a strong bullish trend in the past few months. However, recently, the stock’s momentum has faded after it has found intense resistance at 283p. It remains slightly above the 25-day and 50-day moving averages. Notably, it seems like it has formed a double-top pattern. 

Therefore, a bullish breakout will be confirmed if the price manages to move above the resistance at 283p. Such a move will push the share price to the next key resistance level at 300p. On the flip side a drop below 270p will invalidate the bullish view.

Legal & General