The SEEK Limited (ASX: SEK) share price is another one of the many S&P/ASX 200 Index (INDEXASX: XJO) shares that have been hit in the current ASX correction.
With SEEK shares down by around 20% over the past couple of weeks, does this present a buying opportunity for astute long-term investors?
How has SEEK performed recently?
I think it's always good to review a company's past performance to put things in perspective and get a more rational assessment of how a company has recently been performing.
For the six months ended December 31, SEEK delivered a 16% increase in revenue over the prior corresponding period (pcp) to $875.5 million, which I believe was a very solid result in challenging market conditions.
The company's earnings before interest, tax, depreciation and amortisation (EBITDA) grew more slowly by only 4% to $246.4 million. Meanwhile, SEEK reported that net profit after tax (NPAT) dropped 24% over the pcp to $75.6 million. However, this was mainly due to strong recent investment, including losses in its Early Stage Ventures as well as the positioning of new investments to driver further growth in the years to come.
The SEEK Australia and New Zealand business delivered roughly flat revenue during the half, while strong growth in depth revenue helped to partially mitigate weak ad volumes.
At the end of the most recent half, SEEK held a healthy 37% share of the market, which was around six times larger than that of its the nearest competitor.
Overseas markets still offer the most potential
It is its overseas operations where SEEK still has the most growth potential. This is where the company's current growth is coming from.
SEEK's Asia segment delivered an 8% increase in revenue to $91.3 million during the half, despite the weakness in its largest market of Hong Kong due to the protests.
Additionally, SEEK Investments reported a 24% lift in revenue over the pcp to $515.7 million, driven by overseas markets.
Impact of coronavirus
With the release of its first-half results late last month, SEEK warned that the coronavirus could prevent the company from achieving its FY 2020 guidance.
At the time of the announcement, the virus was largely contained to China and Hong Kong. So, with the situation now worsening and spreading to more countries, the impact to SEEK's business could be much wider.
Foolish takeaway
SEEK's Australian business, in particular, is now highly correlated with the state of the economy due to the maturity of the market. With the chances of a recession more likely, SEEK could see revenues fall further.
However, with the SEEK share price falling significantly over the past few weeks, I believe that most of this downside has now been well and truly factored out of its current price.
