Real Brokerage (REAX): Losses Widen but Forecasts Signal 71.5% Earnings Growth and Deep Value

Real Brokerage (REAX) has seen its losses deepen at an average annual rate of 27.4% over the last five years, with no improvement in net profit margin during that period. Still, analysts now forecast that REAX could achieve profitability within the next three years. They project earnings to grow by an impressive 71.51% per year and revenues by 13.5% per year, both outpacing the broader US market.

See our full analysis for Real Brokerage.

With the latest earnings in hand, the next step is to see how these results stack up against the current investor narratives. It is important to find out where the data supports common views and where it might upend expectations.

See what the community is saying about Real Brokerage

Margins Face Headwinds from Agent Caps

• Operating profit margins are expected to rise from -0.8% today to just 0.9% in three years, reflecting only a modest shift despite rapid top-line growth.
• According to the analysts' consensus view, there is some tension between margin expansion forecasts and ongoing concerns:
  • Consensus highlights that a growing share of transactions handled by "capped" high-producing agents, who pay a flat fee instead of a percentage, could restrict margins structurally even as volumes grow.
  • Analysts also note that management expects margin pressure to persist year over year, which complicates the bullish case for scalable profit improvements buoyed by technology and agent growth.

Analyst expectations for margin growth run up against structural concerns, keeping the path to scalable profits in focus. 📊 Read the full Real Brokerage Consensus Narrative.

Share Dilution Risk Offsets Growth

• The number of outstanding shares is projected to increase by 5.95% per year for the next three years, mainly due to stock-based compensation and agent incentives.
• Consensus narrative discusses the trade-off between aggressive investment in AI-driven platforms, which should drive revenue and operational leverage, and the risk that continued share issuance may suppress earnings per share growth:
  • While Real's use of equity for incentives aligns agent interests with the company's growth, persistent dilution means shareholders may see less benefit from rising top-line and bottom-line figures.
  • This tension challenges optimism around technology-driven earnings upside, especially if revenue growth does not outpace dilution at the share level.

Trading Far Below DCF Fair Value

• Shares currently trade at $3.47, well below both the DCF fair value of $20.75 and the analyst price target floor of $6.00, suggesting deep value relative to expected long-term profitability.
• The consensus narrative frames this valuation gap as an opportunity, so long as Real delivers on forecasts for revenue of $2.8 billion and earnings of $26.3 million by 2028:
  • Analysts underscore that today's steep discount may appeal to value-finding investors, but only if margin, revenue, and risk estimates hold up.
  • However, the requirement for a 75.7x PE ratio in three years hints at lofty growth baked into the valuation models, setting a high bar for future performance.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Real Brokerage on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Have a unique take on the figures? Shape your own perspective and create a narrative in just a few minutes. Do it your way.

A great starting point for your Real Brokerage research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Explore Alternatives

Real Brokerage’s ambitious growth story is tempered by persistent margin pressure and dilution, which threaten the path to scalable and reliable profitability.

If you want more consistent performance and fewer surprises, use stable growth stocks screener (2113 results) to identify companies that steadily grow earnings and revenue through diverse market conditions.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com