On Thursday the REA Group Limited (ASX: REA) share price fell 4.5% to $71.98.
This decline means the property listings company's shares have fallen over 23% since peaking at $94.12 in August.
Is the REA Group share price in the buy zone?
I think it is. Even though the Australian property market is going through a tough time at the moment with clearance rates falling and house prices tumbling, REA Group has continued to grow its bottom line at an impressive rate.
In the first quarter of FY 2019 REA Group posted a 17% increase in revenue to $221.9 million and a 23% jump in EBITDA to $130.9 million.
While part of this growth was driven by the inclusion of the Hometrack Australia business which was not in the prior corresponding period, a strong performance from its Australian Residential business was also a key factor.
This business benefitted greatly from price changes which took effect in July, an improved product mix, and further depth penetration.
REA Group CEO, Tracey Fellows, explained: "Our strong results this quarter demonstrate, despite tougher market conditions, our customers and consumers are clearly seeing value in the products and experiences we are creating. When it is time to buy or sell, Australians recognise they only need to visit one place."
Fellows, who will depart REA Group in January, also advised that visits to its realestate.com.au site have remained strong.
She said: "Realestate.com.au's audience lead remains strong, seeing 2.7 times more visits than the nearest competitor over the quarter. Consumers remain highly engaged across all platforms. Our app was launched on average 27.2 million times a month during the quarter, and has now been downloaded more than 8.3 million times."
Should you invest?
REA Group's shares are currently changing hands at 28x estimated forward earnings. While this is by no means cheap, I think it is good value for a company with such a strong business model, positive growth prospects, and a clear market leading position.
As a result, I would choose it over rival Domain Holdings Australia Ltd (ASX: DHG) and fellow housing market-exposed shares such as Nick Scali Limited (ASX: NCK) and Harvey Norman Holdings Limited (ASX: HVN).
