The average target price of LAVV3.SA is 12 and suggests 21% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 13.0. This translates into 29% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 12.0. This suggests 19% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Lavvi Empreendimentos Imobiliários S.A. develops and builds residential and non-residential mid-end, upper-mid-end, and high-end properties in Brazil. It offers properties under the Lavvi brand name. The company was incorporated in 2016 and is headquartered in São Paulo, Brazil.

Brazil

Lavvi Empreendimentos Imobiliários S.A.

Real Estate

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, and there is a clear trend. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. On average, the company pays dividends every four months. 

LAVV3.SA reported revenue of BRL 1 549mn in the last 12 months, up 72% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 48% from FY23 to BRL 1.75. Market expects EPS to reach BRL 1.55 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 32ppts over past six months and grown 6ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 26.2% in the last 12 months, a decline from 29.6% in FY23. 

Historically, LAVV3.SA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 29.6%, a growth from 25.6% in FY23. 

Lavvi Empreendimentos Imobiliários S.A. reported a return on equity (RoE) of 24.8% in the last 12 months, up from 18.9% in FY23. The market consensus projects an RoE of 32.2% in FY24, again ahead of its peers. 

Another important profitability metric, return on assets (RoA), amounted to 12.1% in the last 12 months, an increase from 11.2% in FY23. The market analysts predict that RoA will be 17.5% in FY24, again stronger than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 14.3%, above the peers. The consensus estimate for FY24 for RoCE is 24.0%, again ahead of the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.1 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

LAVV3.SA has average trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is usually quite stable and is average on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, robust profitability, solid return on capital, strong debt servicing capacity, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, LAVV3.SA is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, LAVV3.SA is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to minimal. 

Based on key historical and expected multiples, the stock is undervalued relative to its peers. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITD. 

Lavvi Empreendimentos Imobiliários S.A.

R$ 10.05

7

Lavvi Empreendimentos Imobiliários S.A.

R$ 10.05

7

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 10.05

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