It’s often talked about as one of the S&P/ ASX200’s (ASX: XJO) best growth businesses and property website operator REA Group Limited (ASX: REA) today named Janelle Hopkins as its new chief financial officer.
Ms Hopkins is an outsider to REA Group as the current CFO at Australia Post and is due to start the top job on June 3 2019.
REA Group is still majority owned by media giant News Corp (ASX: NWS) with its current CEO Tracey Fellowes moving up the senior managerial ranks at News Corp to likely an even better paying job.
REA Group is prized by local investors due to its phenomenal track record of growth and a return on equity (as a key measure of profitability for an investment) that has consistently sat around 30%.
Generally companies with a high return on equity such as REA Group, Cochlear Ltd (ASX: COH) and the a2 Milk Co. Ltd (ASX: A2M) tend to look expensive on conventional valuation metrics such as a price-to-earnings ratios, but still deliver share price gains as they’re capital light and profitable businesses.
For REA Group falling property prices and lower listing volumes in Sydney and Melbourne are no secret and present a short-term headwind, although if properties become harder to sell then vendors may be prepared to pay more fees to REA Group to have their property advertised more prominently.
Arguably the weakness in property markets is now reflected in the retreating REA Group share price, with it likely to deliver a first quarter of 2019 trading update later this month.
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Tom Richardson owns shares of A2 Milk, Cochlear Ltd., and REA Group Limited.
You can find Tom on Twitter @tommyr345
The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Cochlear Ltd. and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.