Insights

At today’s REA Group (ASX:REA) share price, is it time to buy?

Could it be time to buy REA Group shares?
The post At today’s REA Group (ASX:REA) share price, is it time to buy? appeared first on The Motley Fool Australia. –

At the current REA Group Limited (ASX: REA) share price, could it be time to consider the property portal business? It recently reported its FY21 result.

What does REA Group do?

It’s a multinational digital advertising business for property. It operates the leading Australian residential and commercial property websites, realestate.com.au and realcommercial.com.au. It also has a leading website for share property, flatmates.com.au.

But Australian property portals aren’t the only thing it does. Other operations include the mortgage broking franchise groups Smartline Home Loans and Mortgage Choice, as well as PropTrack – a leading provider of property data services.

Internationally, it has a controlling interest in Indian business Elara Technologies, which is the operator of Housing.com, Makaan.com and PropTiger.com. It also has leading portals in Hong Kong and China. REA Group has a large minority holding of Move Inc (operator of realtor.com) in the US and PropertyGuru which has property sites in Malaysia, Singapore, Thailand, Vietnam and Indonesia.

REA Group’s FY21 result

The business reported its FY21 result last week. It said that revenue was up 13% to $928 million. National listings were up 15% in FY21.

REA Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 19% to $565 million. Net profit went up 18% to $318 million and earnings per share (EPS) grew by 21% to $2.47. Excluding the impact of acquisitions, revenue increased 11% for the year, EBITDA including associates rose 21% and net profit went up 24%.

The company explained that strong cost management across the year resulted in core operating cost growth (excluding acquisitions) being contained to 3% year on year.

REA Group’s board decided to increase the full year dividend by 19% to $1.31 per share.

The company explained that Elara and REA Group’s Asian division continue to be impacted by COVID-19 effects. However, in FY21 Elara saw audience growth of 92% year on year and local currency revenue growth of 23%.

In America, realtor.com’s average monthly unique users for the fourth quarter grew 32% year on year to 106 million. Move’s equity accounted result positively contributed to the overall result, improving from a A$7 million loss in the prior year to a A$16 million gain in FY21.

REA Group share price drops

Since 5 August 2021 (the day before REA Group’s result), the REA Group share price has fallen around 8%.

REA Group gave an update regarding current trading with its FY21 report. Whilst it said that the Australian residential business will benefit from price increases which came into effect from 1 July 2021, listing volumes in July were down 3% year on year. Melbourne listings were up 3% while Sydney listings were down 22%.

The business continues to target positive full year “operating jaws” while increasing the level of investment to deliver its strategic initiatives.

Is it now good value?

There are a range of views on REA Group.

One view is that REA Group is fairly priced – Credit Suisse currently rates the REA Group share price as neutral with a price target of $152.50. The Sydney lockdown and listings decline is causing uncertainty.

But Morgan Stanley currently rates the REA Group share price as a buy with a price target of $185. The ongoing Sydney lockdown could cause downgrades, but the broker believes a recovery will occur once restrictions are lifted. However, according to Morgan Stanley, the REA Group share price is valued at 40x FY23’s estimated earnings.

The post At today’s REA Group (ASX:REA) share price, is it time to buy? appeared first on The Motley Fool Australia.

Should you invest $1,000 in REA Group right now?

Before you consider REA Group, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and REA Group wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

Leading brokers name 3 ASX shares to buy today

3 top ASX results from week one of reporting season

ASX 200 rises, Betmakers soars, REA Group drops

One reason why the Domain (ASX:DHG) share price is down 7%
Why BHP, Northern Star, REA, & ResMed shares are dropping

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!