The REA Group Limited (ASX: REA) share price is likely to be on the move on Friday following the release of the property listings company’s full year results.
How did REA Group perform in FY 2019?
For the 12 months ended June 30, REA Group posted an 8% increase in revenue to $874.95 million and a 6% lift in net profit from core operations to $295.5 million.
Group operating income from core operations increased 8% to $874.9 million and EBITDA also rose 8% to $501.2 million.
This was driven by the continued growth in listing depth products and the inclusion of a full year of operating income for the Hometrack business which was not included in the prior comparative period.
Pleasingly, management advised that operating income grew across all regions for the year, with Australia remaining the primary driver for the business.
Australian operating income increased by 8% to $826.3 million thanks to the resilient performance of its residential property and online advertising business.
The company’s Asian business recorded revenue growth of 10% to $48.6 million and EBITDA of $1.9 million. This growth was predominately driven by MyFun and Malaysia.
Finally, the Financial Services business delivered operating income of $27 million in FY 2019. This was an 8% reduction on the prior year and caused by tighter lending conditions and the uncertainty in the property market reducing mortgage settlements across the industry.
REA Group CEO, Owen Wilson, said: “REA has delivered a strong result in a year of unprecedented market conditions. Our continued revenue growth was achieved despite significant declines in listings and new developments, a clear illustration of the value we deliver to customers and consumers.”
Although the Australian market remains challenging, management notes its “Australian Residential business will have the benefit of price increases which came into effect on 1 July 2019 plus stronger levels of both Premiere and total depth product penetration on the back of the latest Premiere offering.”
However, it has warned that listings for the first half of FY 2020 are likely to be lower than the prior corresponding period. This is due to the comparatively favourable listings environment in the first half of FY 2019.
In light of this, it expects “revenue growth to be heavily skewed towards the second half.”
No real guidance was given, other than management’s aim to grow revenue quicker than costs over the period.
How does this compare to expectations?
As I mentioned here earlier this week, analysts at Goldman Sachs were expecting the company to report revenue growth of 11% to $894 million and EBITDA growth of 11% to $516 million.
This means that REA Group’s result has fallen a touch short of expectations based on these estimates.
Whilst REA Group may have fallen short of expectations, I still believe it would be a great buy and hold investment and a better option than rival Domain Holdings Australia Ltd (ASX: DHG).
In light of this, I would consider taking advantage of any share price weakness to buy shares along with these high quality blue chip shares.
You’re invited! For a limited time, The Motley Fool Australia is giving away an urgent new investment report detailing our 3 TOP BLUE CHIP SHARES to own in 2019.
So if you like trustworthy, stable, high-performing companies that pay fat fully franked dividends – we’ve got you covered!
Stock #1 is a beloved old Australian company turning its attention to high-margin businesses... and rapidly returning cash to shareholders with its hefty dividend...
While Stock #2 is an online powerhouse that’s rapidly gaining market share all around the globe... poised for years (or even decades) of tremendous growth...
Even better, Stock #3 offers a whopping 6.5% grossed-up dividend! Which beats the rates on term deposits right out of the water – and offers the potential for capital gains, too.
You can discover all three shares inside our new report right now. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a LIMITED TIME ONLY!
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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.