REA Group (ASX:REA) - Share price, News & Analysis

Q: What is the Fair Price of REA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

REA (A$124.54) is trading below our estimate of [[fair value]] (A$131.58)

REA fundamental analysis
Snowflake Score
Valuation	1/6
Future Growth	4/6
Past Performance	6/6
Financial Health	5/6
Dividends	0/6

REA Stock Overview

REA Group Limited engages in online property advertising business in Australia, Asia, and North America.

Rewards

Trading at 5.3% below our estimate of its fair value

Earnings are forecast to grow 13.46% per year

Earnings grew by 168.2% over the past year

Risk Analysis

No risks detected for REA from our risk checks.

REA Group Competitors

carsales.com

ASX:CAR

AU$6.1b

SEEK

ASX:SEK

AU$8.3b

Domain Holdings Australia

ASX:DHG

AU$2.3b

Nine Entertainment Holdings

ASX:NEC

AU$3.5b

Price History & Performance

Summary of all time highs, changes and price drops for REA Group
Historical stock prices
Current Share Price	AU$124.54
52 Week High	AU$180.67
52 Week Low	AU$93.77
Beta	0.97
1 Month Change	1.67%
3 Month Change	16.09%
1 Year Change	-21.88%
3 Year Change	28.87%
5 Year Change	93.54%
Change since IPO	9,263.91%

Recent News & Updates

Jul 23

Calculating The Intrinsic Value Of REA Group Limited (ASX:REA)

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of REA Group Limited...

Jul 11

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

Today we're going to take a look at the well-established REA Group Limited ( ASX:REA ). The company's stock saw a...

Jun 29

Is REA Group (ASX:REA) Using Too Much Debt?

Warren Buffett famously said, 'Volatility is far from synonymous with risk.' When we think about how risky a company...

Shareholder Returns

	REA	AU Interactive Media and Services	AU Market
7D	-0.4%	1.6%	1.0%
1Y	-21.9%	-19.8%	-7.9%

Return vs Industry: REA underperformed the Australian Interactive Media and Services industry which returned -19.8% over the past year.

Return vs Market: REA underperformed the Australian Market which returned -7.9% over the past year.

Price Volatility

Is REA's price volatile compared to industry and market?
REA volatility
REA Average Weekly Movement	6.5%
Interactive Media and Services Industry Average Movement	9.0%
Market Average Movement	10.6%
10% most volatile stocks in AU Market	17.5%
10% least volatile stocks in AU Market	4.7%

Stable Share Price: REA is less volatile than 75% of Australian stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: REA's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1995	2,931	Owen Wilson	https://www.rea-group.com

REA Group Limited engages in online property advertising business in Australia, Asia, and North America. It offers property and property-related services on websites and mobile apps. The company operates residential, commercial, share, and co-working property sites, such as realestate.com.au, realcommercial.com.au, spacely.com.au, Flatmates.com.au, iproperty.com.my, smartline.com.au, rumah123.com, iproperty.com.sg, squarefoot.com.hk, ThinkgOfLiving.com, myfun.com, smartexpos.com, makaan.com, housing.com, PropTiger.com, move.com, realtor.com, and 99.co.

REA Group Fundamentals Summary

How do REA Group's earnings and revenue compare to its market cap?
REA fundamental statistics
Market Cap	AU$16.46b
Earnings (TTM)	AU$370.58m
Revenue (TTM)	AU$1.27b

44.4x

P/E Ratio

13.0x

P/S Ratio

Is REA overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
REA income statement (TTM)
Revenue	AU$1.27b
Cost of Revenue	AU$469.09m
Gross Profit	AU$801.58m
Other Expenses	AU$431.00m
Earnings	AU$370.58m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

Aug 08, 2022

Earnings per share (EPS)	2.80
Gross Margin	63.08%
Net Profit Margin	29.16%
Debt/Equity Ratio	32.1%

How did REA perform over the long term?

See historical performance and comparison

Dividends

1.2%

Current Dividend Yield

52%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is REA undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

1/6

Valuation Score 1/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for REA?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for REA. This is calculated by dividing REA's market cap by their current preferred multiple.
What is REA's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	AU$16.46b

REA key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	13.2x
Enterprise Value/EBITDA	30.9x
PEG Ratio	3.3x

Price to Earnings Ratio vs Peers

How does REA's PE Ratio compare to its peers?

REA PE Ratio vs Peers

The above table shows the PE ratio for REA vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	43.1x
CAR carsales.com	42.4x	17.9%	AU$6.1b
SEK SEEK	45.8x	10.1%	AU$8.3b
DHG Domain Holdings Australia	66.9x	23.0%	AU$2.3b
NEC Nine Entertainment Holdings	17.3x	7.4%	AU$3.5b
REA REA Group	44.4x	13.5%	AU$16.5b

Price-To-Earnings vs Peers: REA is expensive based on its Price-To-Earnings Ratio (44.4x) compared to the peer average (43.1x).

Price to Earnings Ratio vs Industry

How does REA's PE Ratio compare vs other companies in the Global Interactive Media and Services Industry?

Price-To-Earnings vs Industry: REA is expensive based on its Price-To-Earnings Ratio (44.4x) compared to the Global Interactive Media and Services industry average (25.1x)

Price to Earnings Ratio vs Fair Ratio

What is REA's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

REA PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	44.4x
Fair PE Ratio	31.8x

Price-To-Earnings vs Fair Ratio: REA is expensive based on its Price-To-Earnings Ratio (44.4x) compared to the estimated Fair Price-To-Earnings Ratio (31.8x).

Share Price vs Fair Value

What is the Fair Price of REA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: REA (A$124.54) is trading below our estimate of fair value (A$131.58)

Significantly Below Fair Value: REA is trading below fair value, but not by a significant amount.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is REA Group forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

13.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: REA's forecast earnings growth (13.5% per year) is above the savings rate (1.8%).

Earnings vs Market: REA's earnings (13.5% per year) are forecast to grow faster than the Australian market (6.2% per year).

High Growth Earnings: REA's earnings are forecast to grow, but not significantly.

Revenue vs Market: REA's revenue (9% per year) is forecast to grow faster than the Australian market (5.7% per year).

High Growth Revenue: REA's revenue (9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: REA's Return on Equity is forecast to be high in 3 years time (31.1%)

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Past Performance

How has REA Group performed over the past 5 years?

Past Performance Score

6/6

Past Performance Score 6/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

20.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: REA has high quality earnings.

Growing Profit Margin: REA's current net profit margins (29.2%) are higher than last year (15.7%).

Past Earnings Growth Analysis

Earnings Trend: REA's earnings have grown significantly by 20% per year over the past 5 years.

Accelerating Growth: REA's earnings growth over the past year (168.2%) exceeds its 5-year average (20% per year).

Earnings vs Industry: REA earnings growth over the past year (168.2%) exceeded the Interactive Media and Services industry 22.2%.

Return on Equity

High ROE: REA's Return on Equity (27.7%) is considered high.

Discover strong past performing companies

Financial Health

How is REA Group's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: REA's short term assets (A$505.7M) exceed its short term liabilities (A$289.9M).

Long Term Liabilities: REA's short term assets (A$505.7M) do not cover its long term liabilities (A$860.7M).

Debt to Equity History and Analysis

Debt Level: REA's net debt to equity ratio (16.9%) is considered satisfactory.

Reducing Debt: REA's debt to equity ratio has reduced from 51.4% to 32.1% over the past 5 years.

Debt Coverage: REA's debt is well covered by operating cash flow (99.5%).

Interest Coverage: REA's interest payments on its debt are well covered by EBIT (87.9x coverage).

Balance Sheet

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Dividend

What is REA Group current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

1.20%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: REA's dividend (1.2%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.62%).

High Dividend: REA's dividend (1.2%) is low compared to the top 25% of dividend payers in the Australian market (6.24%).

Stability and Growth of Payments

Stable Dividend: REA is not paying a notable dividend for the Australian market, therefore no need to check if payments are stable.

Growing Dividend: REA is not paying a notable dividend for the Australian market, therefore no need to check if payments are increasing.

Earnings Payout to Shareholders

Earnings Coverage: REA is not paying a notable dividend for the Australian market.

Cash Payout to Shareholders

Cash Flow Coverage: REA is not paying a notable dividend for the Australian market.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

2.3yrs

Average management tenure

CEO

Owen Wilson (58 yo)

3.58yrs

Tenure

AU$4,363,108

Compensation

Mr. Owen James Wilson, BCom, ACA, GAICD, serves as Director at PropertyGuru Group Limited since 2022. He serves as Chief Executive Officer and Executive Director at REA Group Limited since January 7, 2019....

CEO Compensation Analysis

Compensation vs Market: Owen's total compensation ($USD3.01M) is about average for companies of similar size in the Australian market ($USD3.99M).

Compensation vs Earnings: Owen's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: REA's management team is considered experienced (2.3 years average tenure).

Board Members

Experienced Board: REA's board of directors are considered experienced (4.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/07 00:00
End of Day Share Price	2022/08/05 00:00
Earnings	2021/12/31
Annual Earnings	2021/06/30