Lloyds Banking Group plc (LYG)
Valuation Overview•Is Lloyds Banking Group plc Overvalued or Undervalued?
Priced at a premium to peer multiples and intrinsic cash flows, demanding strong execution to justify current levels.
Fragile underlying quality score of 40/100; weak margins or elevated debt leverage warrant caution.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: Average quality business weighed down by significant solvency concerns.
Wall Street is cautious, forecasting potential downside alongside robust expected earnings growth. This outlook is strongly supported by highly attractive capital returns, driven by a balanced mix of reliable dividends and share buybacks.
LYG struggles with subpar profitability and pressured margins. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company maintains stable top-line performance paired with robust earnings compounding (10.5% EPS 3Y CAGR). Operating efficiency remains adequate with margins around 10.2%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $50.7B | +72.8% | — | — | +10.6% | |
| EBITDA | $2.0B | — | -2.5% | — | — | |
| Net Income | $1.3B | +5.4% | +6.8% | — | +18.4% | |
| EPS (Diluted) | $0.09 | +8.0% | +10.5% | +41.3% | +23.8% | |
| Free Cash Flow | $0.00 | +92.9% | — | — | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 100.0% | 45.3% | 60.1% | 68.9% |
| Operating Margin | 10.2% | 16.1% | 21.6% | 20.0% |
| Net Margin | 7.2% | 11.7% | 16.9% | 14.9% |
| FCF Margin | — | -6.8% | 17.1% | 14.3% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.11 | $0.13 | +18.2% | ||
| Q1'26 | $0.11 | $0.12 | +9.1% | ||
| Q4'25 | $0.12 | $0.05 | -58.3% | ||
| Q3'25 | $0.10 | $0.14 | +40.0% | ||
| Q2'25 | $0.08 | $0.11 | +37.5% | ||
| Q1'25 | $0.08 | $0.05 | -37.5% | ||
| Q4'24 | $0.09 | $0.10 | +13.4% | ||
| Q3'24 | $0.07 | $0.09 | +34.6% |
Total return is +37.6% (1Y), outperforming the benchmark by +12.6%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +5.2% | -4.1% | — |
| 1Y | +37.6% | +12.6% | +4.7% |
| 3YCAGR | +39.4% | +19.9% | +22.4% |
| 5YCAGR | +19.9% | +6.7% | +28.5% |
| 10YCAGR | +5.4% | -7.5% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Lloyds Banking Group plc (LYG) valuation, health, and returns.
Lloyds Banking Group plc is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Expensive versus peers compared to industry peers. overvalued (implying -26.5% downside from DCF intrinsic value of $4.07)
Lloyds Banking Group plc has multiple valuation anchors: DCF Intrinsic Value: $4.07 | Peer Relative Fair Value: $4.41 | Wall Street Analyst Target: $2.75 (implying -50.4% upside). A convergence of these signals offers higher conviction.
Lloyds Banking Group plc displays fair financial health with a composite quality score of 40/100, supported by a Piotroski F-Score of 5/9, Return on Invested Capital (ROIC) of 3.6%.
Lloyds Banking Group plc pays a 3.1% dividend yield, covered by a 42% payout ratio with 3 years of growth, supplemented by a 2.7% buyback yield.
Lloyds Banking Group plc's current growth trajectory is Accelerating. The company achieved +72.8% 1Y revenue growth and +8.0% 1Y EPS growth, compared to its 3Y revenue CAGR of N/A.
Wall Street consensus is Buy based on 24 analysts, beating EPS expectations in 75% of recent quarters with a 2-quarter streak. The consensus price target represents a -50.4% change from current levels.
Investment risks for Lloyds Banking Group plc include: -22.7% 1-year max drawdown, high beta (1.33x market volatility). Volatility risk is characterized by a beta of 1.33x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.