ASX:REA

Stock Analysis Report

Executive Summary

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


Snowflake Analysis

High growth potential with adequate balance sheet.


Similar Companies

Share Price & News

How has REA Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: REA has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.4%

REA

-1.4%

AU Interactive Media and Services

0.4%

AU Market


1 Year Return

49.1%

REA

47.8%

AU Interactive Media and Services

19.5%

AU Market

Return vs Industry: REA exceeded the Australian Interactive Media and Services industry which returned 47.9% over the past year.

Return vs Market: REA exceeded the Australian Market which returned 19.4% over the past year.


Shareholder returns

REAIndustryMarket
7 Day-1.4%-1.4%0.4%
30 Day4.4%4.5%4.4%
90 Day2.6%6.4%5.0%
1 Year51.0%49.1%50.4%47.8%24.9%19.5%
3 Year119.6%111.0%97.9%87.4%38.6%19.9%
5 Year145.4%128.7%129.5%109.0%60.0%24.0%

Price Volatility Vs. Market

How volatile is REA Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is REA Group undervalued compared to its fair value and its price relative to the market?

142.13x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: REA (A$112.87) is trading above our estimate of fair value (A$67.55)

Significantly Below Fair Value: REA is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: REA is poor value based on its PE Ratio (141.6x) compared to the Interactive Media and Services industry average (32.6x).

PE vs Market: REA is poor value based on its PE Ratio (141.6x) compared to the Australian market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: REA is poor value based on its PEG Ratio (4.9x)


Price to Book Ratio

PB vs Industry: REA is overvalued based on its PB Ratio (16.4x) compared to the AU Interactive Media and Services industry average (7.6x).


Next Steps

Future Growth

How is REA Group forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

27.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: REA's forecast earnings growth (28.6% per year) is above the savings rate (1.1%).

Earnings vs Market: REA's earnings (28.6% per year) are forecast to grow faster than the Australian market (9.6% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: REA's revenue (7.5% per year) is forecast to grow faster than the Australian market (3.8% per year).

High Growth Revenue: REA's revenue (7.5% 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 (31.5%)


Next Steps

Past Performance

How has REA Group performed over the past 5 years?

-9.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: REA has a large one-off loss of A$190.1M impacting its June 30 2019 financial results.

Growing Profit Margin: REA's current net profit margins (11.2%) are lower than last year (29.1%).


Past Earnings Growth Analysis

Earnings Trend: REA's earnings have declined by -9.5% per year over the past 5 years.

Accelerating Growth: REA's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: REA had negative earnings growth (-58.5%) over the past year, making it difficult to compare to the Interactive Media and Services industry average (0.8%).


Return on Equity

High ROE: REA's Return on Equity (11.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is REA Group's financial position?


Financial Position Analysis

Short Term Liabilities: REA's short term assets (A$307.0M) do not cover its short term liabilities (A$444.9M).

Long Term Liabilities: REA's short term assets (A$307.0M) exceed its long term liabilities (A$231.4M).


Debt to Equity History and Analysis

Debt Level: REA's debt to equity ratio (34.2%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if REA's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: REA's debt is well covered by operating cash flow (117.4%).

Interest Coverage: REA's interest payments on its debt are well covered by EBIT (52.3x coverage).


Balance Sheet

Inventory Level: REA has a low level of unsold assets or inventory.

Debt Coverage by Assets: REA's debt is not covered by short term assets (assets are 1x debt).


Next Steps

Dividend

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

1.04%

Current Dividend Yield


Dividend Yield vs Market

company1.0%marketbottom25%2.3%markettop25%5.5%industryaverage0.4%forecastin3Years1.4%

Current dividend yield vs market & industry

Notable Dividend: REA's dividend (1.05%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.34%).

High Dividend: REA's dividend (1.05%) is low compared to the top 25% of dividend payers in the Australian market (5.47%).


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.


Current Payout to Shareholders

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


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of REA's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.


Next Steps

Management

What is the CEO of REA Group's salary, the management and board of directors tenure and is there insider trading?

0.8yrs

Average management tenure


CEO

Owen Wilson (55yo)

1yrs

Tenure

AU$1,792,492

Compensation

Mr. Owen James Wilson, B.Com, ACA, serves as Chief Executive Officer at REA Group Limited since January 7, 2019. Mr. Wilson had been the Chief Financial Officer of REA Group Limited from September 1, 2014  ...


CEO Compensation Analysis

Compensation vs Market: Owen's total compensation ($USD0.00) is below average for companies of similar size in the Australian market ($USD3.87M).

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


Management Age and Tenure

0.8yrs

Average Tenure

Experienced Management: REA's management team is not considered experienced ( 0.8 years average tenure), which suggests a new team.


Board Age and Tenure

6.6yrs

Average Tenure

54yo

Average Age

Experienced Board: REA's board of directors are considered experienced (6.6 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellAU$956,42808 Sep 19
Tracey Fellows
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares9,100
Max PriceAU$105.10
SellAU$105,68102 Sep 19
Owen Wilson
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares1,000
Max PriceAU$105.68
SellAU$93,774,83812 Aug 19
Pinnacle Investment Management Limited
EntityCompany
Shares1,052,283
Max PriceAU$89.12
BuyAU$51,226,18512 Aug 19
Pinnacle Investment Management Limited
EntityCompany
Shares652,183
Max PriceAU$78.55
SellAU$9,990,77509 Aug 19
Hyperion Asset Management Limited
EntityCompany
Shares130,063
Max PriceAU$76.81

Ownership Breakdown

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


Management Team

  • Sarah Turner

    General Counsel & Company Secretary

    • Tenure: 4.3yrs
  • Owen Wilson (55yo)

    CEO & Director

    • Tenure: 1yrs
    • Compensation: AU$1.79m
  • Janelle Hopkins

    Chief Financial Officer

    • Tenure: 0.6yrs
  • Andrew Rechtman

    Chief Customer Product Officer

    • Tenure: 0.3yrs
  • Natalie Cerny

    Head of Corporate Affairs & Communications

    • Tomas Varsavsky

      Chief Technology & Data Officer

      • Tenure: 0.3yrs
    • Val Brown

      Chief Consumer Product Officer

      • Tenure: 0.3yrs
    • Melina Cruickshank

      Chief Marketing & Audience Officer

      • Tenure: 1.1yrs
    • Mary Lemonis

      Chief People Officer

      • Tenure: 1.8yrs
    • Graham Curtin

      Executive Manager of Financial Reporting


      Board Members

      • Richard Freudenstein (54yo)

        Non-Executive Director

        • Tenure: 13.2yrs
        • Compensation: AU$180.43k
      • Kathleen Conlon (55yo)

        Independent Non-Executive Director

        • Tenure: 12.6yrs
        • Compensation: AU$193.00k
      • Hamish McLennan (53yo)

        Chairman

        • Tenure: 7.8yrs
        • Compensation: AU$375.43k
      • Roger Amos (71yo)

        Independent Non-Executive Director

        • Tenure: 13.5yrs
        • Compensation: AU$197.00k
      • Tracey Fellows (54yo)

        Non-Executive Director

        • Tenure: 5.4yrs
        • Compensation: AU$2.17m
      • Owen Wilson (55yo)

        CEO & Director

        • Tenure: 1yrs
        • Compensation: AU$1.79m
      • Michael Miller (50yo)

        Non-Executive Director

        • Tenure: 4.2yrs
      • Nick Dowling (43yo)

        Non-Executive Director

        • Tenure: 1.7yrs
        • Compensation: AU$23.91k

      Company Information

      REA Group Limited's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: REA Group Limited
      • Ticker: REA
      • Exchange: ASX
      • Founded: 1995
      • Industry: Interactive Media and Services
      • Sector: Media
      • Market Cap: AU$14.923b
      • Shares outstanding: 131.71m
      • Website: https://www.rea-group.com

      Number of Employees


      Location

      • REA Group Limited
      • 511 Church Street
      • Richmond
      • Victoria
      • 3121
      • Australia

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      REAASX (Australian Securities Exchange)YesOrdinary SharesAUAUDDec 1999
      REACHIA (Chi-X Australia)YesOrdinary SharesAUAUDDec 1999
      R9CDB (Deutsche Boerse AG)YesOrdinary SharesDEEURDec 1999
      RPGR.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDOct 2014

      Biography

      REA Group Limited engages in online property advertising business in Australia, Asia, and North America. The company advertises property and property-related services on Websites and mobile apps. It operates residential, commercial, share, and co-working property sites, such as realestate.com.au, realcommercial.com.au, Flatmates.com.au, spacely.com.au, iproperty.com.my, rumah123.com, squarefoot.com.hk, ThinkgOfLiving.com, iproperty.com.sg, myfun.com, realtor.com, housing.com, makaan.com, PropTiger.com, move.com, and realtor.com, as well as hometrack.com.au, 1form.com, and smartexpos.com. The company was formerly known as realestate.com.au Ltd. and changed its name to REA Group Limited in December 2008. REA Group Limited was founded in 1995 and is headquartered in Richmond, Australia. REA Group Limited operates as a subsidiary of News Pty Limited 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/26 10:32
      End of Day Share Price2020/01/24 00:00
      Earnings2019/06/30
      Annual Earnings2019/06/30


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.