Own REA (ASX:REA) shares? What to look out for this reporting season

REA is expected to report its FY21 results on Friday. Here’s what to look out for.

| More on:
a family stands together behind a sold sign with their new house in the background.

Image source: Getty Images

The REA Group Ltd (ASX: REA) share price has held up surprisingly well in light of recent lockdowns across Australia.

The global real estate digital advertising company is expected to deliver its full-year FY21 results on Friday, 6 August.

With a potential catalyst for the REA share price right around the corner this reporting season, here’s what investors might want to keep an eye out for.

A strong fourth quarter finish

In REA’s third-quarter update on 7 May, the company said that the residential property market was gathering momentum with “increased levels of buyer enquiry underpinned by low interest rates, improving consumer confidence and healthy bank liquidity”.

The update highlighted that national residential listings were up 98% year-on-year, driven by a 127% increase in Melbourne and a 116% increase in Sydney.

REA Group Chief Executive Officer Owen Wilson commented on the strong rebound saying, “This momentum, combined with strategic investments made throughout FY21, positions REA for a strong finish to the year.”

While the third-quarter update only witnessed a 0.5% increase for the REA share price on the day of the announcement, the company’s shares would steadily grind higher to a record high of $173.11 by 18 June.

Can REA connect the dots?

With the Australian property market continuing to go from strength to strength, the question is whether or not the REA share price can take full advantage of the housing boom.

In the RBA’s August monetary policy minutes, it highlighted that “housing markets have continued to strengthen, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, including first-home buyers. There has also been increased borrowing by investors.”

Looking at REA’s half-year results, the company noted that its realestate.com.au platform was the “clear number one in online real estate”.

In 1H21, the website achieved 12.3 million visitors each month on average, up 39% year-on-year with a record 13 million visits in November 2020.

From a financial perspective, the company’s third-quarter results for the three months ended 31 March 2021 highlighted a 13% increase in revenue and a 10% increase in earnings before interest, taxes, depreciation, and amortisation (EBITDA) compared to a year ago.

REA share price snapshot

Shares in the online real estate platform edged 4.36% lower in July but still up a relatively healthy 12.19% year-to-date.

At the time of writing, the REA share price is trading 0.43% higher to $166.83 and not far away from its all-time high of $173.11.

Should you invest $1,000 in REA right now?

Before you consider REA, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and REA wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News