Goodman share price hits record high on second FY24 guidance upgrade
The Goodman Group (ASX: GMG) share price is scaling new heights on Wednesday.
In early trade, the industrial property company’s shares rose 1.5% to a new record high of $34.90.
Why is the Goodman share price rising?
Investors have been buying the company’s shares this morning following the release of its third quarter update.
According to the release, Goodman delivered a strong operating performance for three months, which management believes positions the business well for the full year and into FY 2025.
In fact, trading was so strong that the company has upgraded its guidance for FY 2024 for a second time.
Initially, Goodman was targeting operating earnings per share growth of 9% this year. It then upgraded this to 11% growth when it released its half year results in February.
Management now expects operating earnings per share growth of 13% in FY 2024. This is being underpinned by a portfolio occupancy rate of 98% and 12-month rolling like-for-like net property income growth of 4.9%.
Management commentary
Goodman’s CEO, Greg Goodman, was pleased with the quarter. He said:
Our active asset management continues to optimise returns for our investors as we deliver essential infrastructure for the expanding digital economy. The location and quality of our properties enables increased productivity, driving demand as our logistics customers are seeking to improve their supply chain efficiency using automation and offering faster transit times. We continue to develop large-scale, high value, data centres, and expand our global power bank to address growing data centre demand as AI usage and cloud computing expands.
During the quarter we internalised the management of the NZX-listed Goodman Property Trust providing a platform for growth for GMT. We continue to review our assets and capital allocation globally, and expect further recycling of capital over time.
Outlook
Speaking about the company’s outlook, Goodman acknowledges that real estate markets will be volatile but believes it is well placed to navigate this. He adds:
The Group continues to execute on its strategy. The challenge of the uncertain interest rate environment, persistent inflation, combined with slowing economic growth, is prolonging volatility in global markets and increased cost of capital.
In the near term we believe aggregate logistics demand is likely to remain at more moderate levels compared to that experienced in the pandemic period. However, supply has been significantly reduced globally, and is generally very constrained in our markets. Our customers remain focused on maximising productivity from their space, preferring infill locations and increasing their investments in technology and automation. Combined with the scarcity of available assets in the markets we operate, should support rental growth and high occupancy.
At the end of the quarter, Goodman had $12.9 billion of development work in progress across 82 projects.
The Goodman share price is up 72% over the last 12 months.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.