WEBULL
WebtradeDownload

L1 Group (ASX:L1G) Shares Look Cheap But Profit Durability Clouds Outlook

Simply Wall St · 1d ago

L1 Group walked into this earnings day looking cheap on trailing numbers with the stock at A$1.185 and a P/E of 5.5x while peers sat far higher. The headline today is not the share price churn; it is the clash between very high reported profitability, including a net margin above 50%, and forecasts that point to much weaker earnings and revenue ahead.

That gap between what the income statement currently shows and what the outlook implies is what is really moving sentiment on L1 Group, not the latest tick on the chart.

Is L1 Group a genuine bargain at a 5.5x P/E with a net margin above 50%, or are non cash earnings flattering the story? Compare its current pricing with our valuation analysis for L1 Group for more detail.

FY 2026 Earnings Summary

  • Revenue (FY 2026, full year): A$963.079 million vs. A$171.728 million in FY 2025 (very large increase, more than 5x)
  • Net Income (Excl. Extra Items, FY 2026, full year): A$540.458 million vs. A$81.107 million in FY 2025 (very large increase, more than 5x)
  • Basic EPS (FY 2026, full year): A$0.0638 per share vs. A$0.0489 per share in FY 2025 (up 30.5%)
  • Net Margin (FY 2026, trailing twelve months): 56.1% vs. 47.2% in FY 2025 (higher margin year on year)

Prefer clear charts to endless tables of figures and earnings notes for L1 Group? See the full visual breakdown of the company, with a focus on its valuation picture, in our company report for L1 Group.

ASX:L1G Trailing 12-Month Revenue & Expenses Breakdown as at Aug 2026
ASX:L1G Trailing 12-Month Revenue & Expenses Breakdown as at Aug 2026

L1 Group earnings and the constructive thesis

L1 Group’s FY 2026 profile shows revenue at A$963.079 million and net income at A$540.458 million, which points to a very profitable fee base backed by a 56.1% net margin. For a diversified active manager, that margin suggests strong operating leverage on current asset and fee levels. The recent 7 day, 30 day and 90 day share price gains also indicate investors have been willing to give the model some credit, at least in the short term, despite the mixed outlook narrative around future earnings.

Where the L1 Group bear case still bites

For L1 Group, the main worry is that such high profitability and a net margin above 50% may not fully reflect underlying, repeatable cash economics. Management already flags softer revenue and earnings ahead, which sits awkwardly next to the very strong FY 2026 print. That tension fits a cautious view on active managers whose fee pools can be sensitive to markets and flows. The recent positive share price trend suggests immediate stress is not acute, but it does not resolve concerns about how durable this earnings level will be.

After such a sharp gap between current margins and forecasts that flag a 43.6% annual earnings decline, it is worth asking whether this is just the visible part of a deeper earnings quality issue. Review the full hidden risk profile in our risk analysis for L1 Group which shows 2 important warning signs.

Stay Ahead With Simply Wall St

If the mix of very high current margins and a forecast earnings decline has L1 Group on your radar, register for free with Simply Wall St and add it to a Watchlist to track share price against fair value and watch for a cleaner entry point. After you take a position, manage L1 Group alongside the rest of your holdings in the Portfolio Command Center so you see the key updates without getting buried in market noise. For a longer term view, tap into crowd insights and different angles on L1 Group and other stocks through the Community. This way you are set up to spot potential catalysts or risks early and stay ahead of the market.

Seeking Alternatives Beyond L1 Group

Fresh stock ideas can move quickly once momentum builds. Screening now helps you avoid getting caught after prices are already flying. Check under the radar for now and act now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.