Is Now The Time To Look At Buying REA Group Limited (ASX:REA)?

July 11, 2022
  •  Updated
October 02, 2022
ASX:REA
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Today we're going to take a look at the well-established REA Group Limited (ASX:REA). The company's stock saw a significant share price rise of over 20% in the past couple of months on the ASX. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on REA Group’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for REA Group

What is REA Group worth?

According to my valuation model, REA Group seems to be fairly priced at around 6.2% below my intrinsic value, which means if you buy REA Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth A$125.01, then there’s not much of an upside to gain from mispricing. What's more, REA Group’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of REA Group look like?

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ASX:REA Earnings and Revenue Growth July 11th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 60% over the next couple of years, the future seems bright for REA Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in REA’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on REA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for REA Group from their most recent forecasts. Luckily, you can check out what analysts are forecasting by clicking here.

If you are no longer interested in REA Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether REA Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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