Last week leading online real estate classifieds operator REA Group Limited (ASX:REA) held its annual general meeting (AGM).
The occasion acted as a reminder of just how strong the growth at REA is and the outlook remains bright.
Here's a reminder of some of the highlights from the 2015 financial year:
- REA grew earnings by 20% to $523 million
- Earnings before interest, tax, depreciation and amortisation (EBITDA) by 27% to $286 million
- Net profit after tax (NPAT) grew 24% to $185 million
- Earnings per share (EPS) up 24% to 140.6 cents per share (cps)
- Total dividends per share increased 23% to 70 cps
REA obviously achieved solid operating results in the past financial year.
Here are some key reasons why investors can also take a positive view on the future:
- Not only is REA's realestate.com.au website the dominant, market leader in Australia but the group also has significant operations in Italy, France, and a growing presence in the USA.
- The group has made a move to solidify its exposure to Asia through the potential acquisition of iProperty Group Ltd (ASX: IPP).
- At the AGM, management provide a first quarter trading update. The results compared with the prior corresponding quarter showed revenues were up 21% to $146 million and that EBITDA has jumped 30% to $82 million.
According to one consensus of analysts' forecasts, REA is expected to earn 174.5 cps in the current financial year. With the shares having outperformed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) over the past year, REA's share price is currently trading at just under $49. This implies a price-to-earnings ratio of 28 times.
Considering the growth expectations and the quality of the group's business model – which enjoys the benefit of similar network effects to Carsales.Com Ltd (ASX: CAR) and SEEK Limited (ASX: SEK) – this could arguably be a reasonable opportunity for acquiring the shares. However more conservative investors may prefer to wait for a lower entry point.
