---
endpoint: analytics
pattern: Property
status: done
latency_ms: 180228
conversation_id: 584606ef-bd32-40d4-9bec-efa259e9fdee
citations: 2
created: 2026-05-31 18:52:58Z
---

# How does Goodman’s valuation compare to peers, and what justifies its premium/discount?

# Goodman Group (GMG AU) — Valuation vs. Peers and Premium Justification

## 1. Where Goodman trades today

CLSA's most recent High-Conviction Outperform note on Goodman (28-May-2025) frames the valuation setup cleanly: GMG was A$32.96 with a 12-month target of A$38.54 (+17% potential return), market cap US$43.1bn, 3M ADV US$117m [8]. By 19-Jun-2025, Goodman was CLSA's top large-cap property pick at A$34.16 vs. an unchanged A$38.54 target (+12.8% upside) [13].

**Key headline multiple**:
- **GMG 12M forward PE: 25.1x**
- **S&P/ASX 200 12M forward PE: 18.3x**
- **PER Relative: 137.5%** → a **37.5% premium to the ASX 200** [1][2]

That 37.5% premium is *below* the post-2019 five-year average relative PER of **134.5%**, with a +1SD band at 157.2% and -1SD at 111.8% [1]. In CLSA's words, "Goodman is trading close to the bottom end of its five-year average" [2].

## 2. How CLSA defines the right peer set (this is the crux)

CLSA explicitly rejects framing Goodman against ASX 200 broad-market multiples or pure A-REITs, and instead uses **two relevant comparator buckets**:

### A) ASX 50 growth stocks — Goodman is *in line*, not at a premium

CLSA's ASX 50 growth-stock comp table (FY1-3 EPS CAGR vs 12M Fwd PE) puts Goodman alongside other quality compounders [4]:

| Company | 12M Fwd PE (x) | FY1-3 EPS CAGR (%) |
|---|---|---|
| COH (Cochlear) | 39 | 13.5 |
| CAR (Car Group) | 32 | 14.0 |
| NWS | 30 | 15.5 |
| WES (Wesfarmers) | 32 | 10.5 |
| TLC (Lottery Corp) | 29 | 10.8 |
| REH (Reece) | 27 | 12.5 |
| **GMG (Goodman)** | **25** | **11.8** |
| WOW (Woolworths) | 25 | 16.5 |
| ALL (Aristocrat) | 25 | 14.5 |
| CSL | 22 | 14.8 |
| RMD (ResMed) | 23 | 10.5 |
| COL (Coles) | 23 | 11.5 |

CLSA's verdict: "The PE is in line with a bunch of ASX 50 growth stocks growing earnings at 11-12% p.a." [2] — i.e. against quality compounders with similar 2-yr earnings growth, **Goodman is not at a premium at all**. It is actually cheaper than COH/CAR/WES/TLC despite a comparable growth profile.

### B) Global industrial REIT + data-centre peers — re-rating toward DC multiples

CLSA explicitly notes: "Goodman has been trading more in line with data centre stocks the past two years" [7]. Their indexed price chart (Dec-22 = 100) tracks Goodman against Prologis (PLD), Equinix (EQIX) and Digital Realty (DLR) — over 2024 Goodman dramatically outperformed all three industrial/DC peers as the market priced in the data-centre pivot [7].

## 3. CLSA's SOTP and DCF — what the premium pays for

CLSA values GMG via a **DCF/SOTP blend = A$38.54**:

| Method | Per-share value | Key assumptions |
|---|---|---|
| **FY26 SOTP** | A$40.57 | 5.5% portfolio cap rate; **24x EBIT multiple on development and funds management** [3][11] |
| **Forward DCF** | A$36.50 | CoE 9.3% (Rf 4.0%, ERP 5.5%, beta 0.97); **terminal growth raised to 5.3%** (vs. 4.7% prior) reflecting GMG's "shift towards being an operating DC business" [3] |

The SOTP build (CLSA estimates) [11]:

| SOTP component | A$m |
|---|---|
| Total investment property (BS + funds, at 5.5% cap) | 22,014 |
| Development valuation (1,862 EBIT × 24x) | 55,209 |
| Management valuation (753 EBIT × 24x) | 18,071 |
| Urban renewal PV | 326 |
| **Active business value** | **73,280** |
| Other assets / cash | 3,534 |
| Less: capitalised overheads (-9,807), debt, other liab. | (14,245) |
| **Net asset value** | **84,910** |
| **NAV per share (A$)** | **40.57** |

At target, the implied multiple is **29x FY26 PE**, which CLSA argues "reflects the expected step-change in earnings from FY27 of c.15% EPS growth" [2].

## 4. What justifies the premium — the fundamental case

### (i) Earnings step-change from the data-centre pipeline
CLSA models EPS growth of **10% FY25 → 12% FY26 → 15%+ from FY27** as DC profits flow through [10]. The thesis: Goodman has a **5GW data-centre pipeline (since upsized to 6GW)** with an end-value of **A$100bn-A$200bn over 10 years**; the first 0.5GW is set to start by June-26 [5][6]. Subsequent disclosures confirm power bank at 6.0 GW across 16 cities with 3.6 GW secured power as of 1H FY26 [14], and management is guiding to ~9% OEPS growth for FY26 [15].

### (ii) Catalyst-rich roadmap
"Significant data centre starts dominating news in Aug, then earnings de-risking events of new DC capital partnerships in Nov followed by pre-lease news in Feb 2026" — i.e. the narrative is shifting from speculation to execution, which CLSA argues compresses the risk premium currently in the discount rate [6].

### (iii) Quality of the underlying business
- Development WIP at A$13.7bn with management targeting 9-12% DC yield on cost and 7-8% on logistics [12]
- Aggressive logistics development restocking via "very large acquisitions"; logistics cap rates beginning to compress again, supporting funds management [12]
- High-conviction pick within Australian Property, alongside small-caps INA/NSR/VCX [13]

## 5. Where the premium is vulnerable (the discount-justifying risks)

CLSA flags two specific multiple-related risks:

1. **Execution risk on the 5GW pipeline.** "Delays in ramping up data centre development starts may pose a risk given the current PE multiple" [9] — i.e. at 25x PE, every quarter of leasing or capital-partnership slippage hits the multiple disproportionately.
2. **Near-term earnings hesitation.** CLSA trimmed FY25-FY27 EPS by 1-4% after the 3Q because management didn't upgrade — driven by US logistics JV delays from tariff uncertainty and DC leasing typically 9-12 months *after* a build starts, which slows profit recognition [10]. This is what produced the -3% target-price cut from A$39.77 to A$38.54.

## 6. Synthesis — premium or fair value?

The bull case CLSA builds is essentially: **Goodman screens "at a premium" only against the wrong peer set (broad ASX 200).** Against the relevant comp set:

- **Vs. ASX 50 growth stocks at comparable EPS growth: in line / mild discount.** GMG at 25x with 11.8% CAGR is cheaper than COH (39x/13.5%), CAR (32x/14%), or REH (27x/12.5%) [4].
- **Vs. global DC infrastructure peers (PLD, EQIX, DLR): tracking together, not extended.** Goodman has outperformed since 2023 but the convergence reflects a re-rating to a hybrid logistics-plus-DC multiple, not a stand-alone premium [7].
- **Vs. its own 5-year history: cheaper.** The 37.5% premium-to-ASX 200 sits below the 5-yr average of 134.5% (i.e., -1SD at 111.8%) [1].

CLSA's read: the premium is justified, and given the FY27 step-change in earnings growth from DC monetisation, the multiple is actually under-priced relative to the visible WIP and pipeline [1]. The High-Conviction Outperform reflects that view; the target of A$38.54 implies 29x FY26 PE, with CLSA arguing the market should look through to the FY27+ growth rate of 15% to validate that multiple [2][3].

**Bottom line**: Goodman trades at a headline 38% premium to the ASX 200 — but the premium is justified by (a) growth in line with the ASX 50's best compounders at a *lower* multiple than those peers, (b) a 6 GW data-centre pipeline that re-classifies the business toward global DC peers (which themselves command structurally higher multiples), and (c) a roadmap of catalysts that should de-risk execution into 2026. The discount risk is purely execution: if the DC starts/leases/capital-partnerships slip, the 25x base multiple is the variable that absorbs the disappointment.

---

**Sources**

[1] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — Figure 16 relative PE chart, 607960765LinqAlpha.PDF
[2] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — "What's in the price?", 607960765LinqAlpha.PDF
[3] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — Valuation methodology (SOTP/DCF), 607960765LinqAlpha.PDF
[4] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — ASX 50 growth comp table, 607960765LinqAlpha.PDF
[5] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — Investment thesis / DC pipeline, 607960765LinqAlpha.PDF
[6] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — Roadmap & catalysts, 607960765LinqAlpha.PDF
[7] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — GMG vs PLD/EQIX/DLR price chart, 607960765LinqAlpha.PDF
[8] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — Target price summary, 607960765LinqAlpha.PDF
[9] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — Investment risks, 607960765LinqAlpha.PDF
[10] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — Earnings revisions, 607960765LinqAlpha.PDF
[11] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — SOTP detail table, 607960765LinqAlpha.PDF
[12] *Goodman - HC O-PF (Roadmap becoming clearer)* — CLSA (28 May 2025) — Key points / operating commentary, 607960765LinqAlpha.PDF
[13] *Australian Property (Who's who in the zoo II)* — CLSA (19 Jun 2025) — Top large cap pick: Goodman, 607962339LinqAlpha.PDF
[14] Goodman Group 1H FY26 Results presentation (Feb 2026) — global power bank 6.0 GW, secured power 3.6 GW
[15] Goodman Group FY25 ASX press release — FY26 OEPS guidance of ~9% growth, development weighted to 2HFY26

## Citations

- [14] **Goodman Group, H1 2026** · external
- [15] **03018996.pdf** · external

