What is LGEN.L's Intrinsic value?

Legal & General Group PLC (LGEN.L) Intrinsic Value Analysis

Executive Summary

As of July 10, 2025, Legal & General Group PLC's estimated intrinsic value ranges from $52.70 to $104.14 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $104.14 -58.5%
Dividend Discount Model (Stable) $52.70 -79.0%

Is Legal & General Group PLC (LGEN.L) undervalued or overvalued?

With the current market price at $250.90, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Legal & General Group PLC's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.69 1.1
Cost of equity 8.1% 12.7%
Cost of debt 5.0% 5.0%
Tax rate 24.1% 36.5%
Debt/Equity ratio 0.43 0.43
After-tax WACC 6.8% 9.8%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 644.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 10.4%
  • Long-term growth rate: 3.5%
  • Fair value: $104.14 (-58.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 12.7% (Low) to 8.1% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $23 to $83
  • Selected fair value: $52.70 (-79.0% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $14492M
Enterprise Value $4023M
Trailing P/E 75.87
Forward P/E 70.56
Trailing EV/EBITDA 0.00
Current Dividend Yield 853.51%
Dividend Growth Rate (5Y) 4.08%
Debt-to-Equity Ratio 0.43

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Dividend Discount Model (Multi-Stage) 57% $20.83
Dividend Discount Model (Stable) 43% $7.91
Weighted Average 100% $82.10

Investment Conclusion

Based on our comprehensive valuation analysis, Legal & General Group PLC's intrinsic value is $82.10, which is approximately 67.3% below the current market price of $250.90.

Key investment considerations:

  • Historical dividend growth of 4.08%

Given these factors, we believe Legal & General Group PLC is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.