What are the blue chip stocks in the real estate services sector of US stocks?

逍遥投资派 wrote a column · Apr 24, 2022 02:54

The 83rd original of Xiaoyao Investment School

What are the blue chip stocks in the real estate services sector of US stocks?

Us Stock Daily Research 29: take an inventory of real estate service stocks

[the results of the analysis are at the end of the 👇]

Today is April 23,2022, Saturday, let's take an inventory of the real estate services sector, a total of 41 stocks, market capitalization from 11.36 million to 28 billion, there are 27 stocks with a market capitalization of more than 300 million, we study in these 27 stocks.

From the perspective of price-to-earnings ratio, there are 10 branches less than 0, 4 less than 8.5, 7 from 8.5 to 25, and 6 above 25, with poor profitability and neutral valuation.

Let's start with four stocks with a price-to-earnings ratio of less than 8.5.

$Newmark Group(NMRK.US)$Revenue has increased for four years except 2020 in five years, but operating profit has fallen for three years in five years. In particular, operating profit has fallen by 87% in 2021, while net profit is basically shrinking. It suddenly soared eightfold to 980 million in 2021, which is very dramatic.

Operating profit is easy to understand. In recent years, the increase in operating expenses is higher than the increase in revenue, and operating profit is constantly squeezed, leaving only 22 million in 2021.

Net profit is due to the sudden emergence of "other non-operating income" subjects of 1.23 billion in 2021, much higher than the level of tens of millions to 100 million in previous years, most likely one-time income.

If calculated on the basis of a net profit of 109 million in 2020, the current price-to-earnings ratio is 23, which is less attractive given shrinking operating profits and uncertain one-time income.

$Realogy Holdings(RLGY.US)$The operating income did not change much before 2021, and suddenly increased by 28% in 2021, while the operating profit increased by two years after three years of decline, but the net profit fell for two years after two consecutive years of decline, and then fell for another two years, and reversed losses in 2021. The income statement shows that the impairment of capital assets reached 250 million in 2019 and 680 million in 2020. The quality of the company's assets is very problematic. Special charges will still reach 42 million in 2021, indicating that the problem has not been completely solved.

The asset-liability ratio is 70%, of which goodwill is 4.8 billion and net assets are only 2.2 billion, so a discount of 0.7 times price-to-book ratio is meaningless.

The current price-to-earnings ratio is 4.65, which is not very attractive.

$Douglas Elliman(DOUG.US)$It is a newly listed company in December 2021, with a slight profit in 2020, a 75% increase in revenue in 2021 and an operating profit of 100 million. The net profit curve is inconsistent, with a loss of 46.4 million in 2020 and a profit of nearly 100 million in 2021.

The income statement shows 58.25 million of the "impairment of capital assets" in 2020, which is the main reason for the loss in 2020.

With a price-to-earnings ratio of 5.3, we can wait for a few quarterly reports. After all, it is a big challenge to maintain 75% revenue growth.

$TRICON RESIDENITAL INC(TCN.US)$It is a newly listed Canadian company in October 2021. From 2020 to 2021, revenue shrank by 3.9%, operating profit fell by 34.5%, but net profit nearly tripled. The income statement shows that the "return on the sale of securities" is 623 million, which should be brought by IPO, and the price-to-earnings ratio is unattractive.

Look at seven stocks with a price-to-earnings ratio of 8.5 to 25.

$Kennedy-Wilson(KW.US)$The growth of five-year net profit was only interrupted in 2020, with an average growth rate of 34% over the past five years and 16.6% in the past three years. The change curve of earnings per share in the past three years is basically the same, but operating profit has declined sharply for four consecutive years, and losses have been expanding in the past three years.

The income statement shows that "income from the sale of securities" and "equity income" reached 750 million, and this income can be traced back a long time and should be incorporated into the company's core income. This company should not be classified as the real estate services sector, but should be more appropriate as the real estate investment sector.

Operating income has basically continued to decline in the past four years, but the rate of return on net assets has obviously increased, which actually confirms that the company is wrapped in the shell of service, and what it actually does is to invest, so revenue does not play a decisive role in the final income. However, operating profit has dragged down, and it is difficult to judge whether the operating profit loss will continue to expand in the future, so it is impossible to evaluate the value of this stock at present.

$Jones Lang LaSalle(JLL.US)$There has been a good growth over the past five years except 2020, with operating profits falling only once in 2020, while net profits fell by 20% in 2017 and 2020. The income statement shows that income tax increased by 160 million and 160% in 2017 over the previous year.

Average growth rate of 5-year net profit23.5%, the increase in earnings per share is also similar.

Revenue increased by 16.7% and net profit increased by 127% in 2021, mainly due to a sharp drop in main business costs, a 3.38% increase in gross profit margin and a 2.15 billion increase in gross profit margin. Generally speaking, it is relatively easy to maintain low business costs than to maintain high revenue growth.

Operating income has increased for four of the five years, net operating income has been in the net inflow range, and free cash flow has been a net inflow. The current ratio is 0.98, the quick ratio is 0.91, and the cash flow is a little tight.

The asset-liability ratio is 59%, the total assets are 15.5 billion, the net profit is 6.4 billion, the proportion of accounts receivable is reasonable, and the proportion of goodwill and intangible assets is 5.5 billion, which is relatively high.

Current price-earnings ratio12, you can choose carefully (⭐️)

$Marcus & Millichap(MMI.US)$It has nothing to do with Motorola. Its English name is Marcus & Millichap and Inc., is Marcus Milichap.

Revenue fell in 2019 and 2020 and grew in the remaining three years, particularly by 81 per cent in 2021 and 59 per cent from the 2018 peak. Operating profit, on the other hand, fell by 9.7% in 2017, and the net profit was in line with the operating profit curve. Operating expenses increased by only 24% in 2021, and operating profit increased 2.5-fold to 190 million in the context of an 80% increase in revenue.

The current price-to-earnings ratio of 13.4 times earnings needs to continue to grow on the basis of 80% revenue in 2021 to support it. We might as well wait for the first-quarter report to see.

$The RMR Group(RMR.US)$Revenue fell 17% in 2020 and recovered only 3% in 2021, while net profit fell by 60%. After recovering 22% in 2021, operating profit increased by 11.6% and net profit decreased by 7.4%. At present, 13.5 times price-to-earnings ratio needs better growth data.

$CBRE Group(CBRE.US)$Five-year revenue fell 0.3% in 2020 alone, operating profit fell 27% in 2020, and net profit fell 41.5% in 2020.

The income statement shows that with almost no change in revenue in 2020, the cost of the main business increased by nearly 2%, to 360 million, resulting in a decline in gross profit of more than 400 million. In 2021, the growth rate of main business costs was less than the 3.2% increase in operating income, resulting in a substantial increase in net profit by 143%. This can also be seen from the change in gross profit margin, 21.8% in 2019, 20.06% in 2020, and 22.22% in 2021.

5-year net profit growth rate25.8%, the earnings per share curve is in good agreement with the net profit curve.

Asset-liability ratio 58%, total assets 22.1 billion, net profit 9.4 billion, accounts receivable 6.8 billion is reasonable. Goodwill and intangible assets increased by 2.3 billion to 7.4 billion in 2021. Check is the acquisition of Dutch International Group (ING). In recent years, CBRE has made continuous foreign equity investment and acquisitions, and goodwill and intangible assets have also been increasing.

Net operating volume and free cash flow increased for 5 years, with a current ratio of 1.2 and a quick ratio of 1.1, making cash flow relatively safe.

The current price-to-earnings ratio is 15.6x, and you can choose (⭐️⭐️)

$Cushman & Wakefield(CWK.US)$Operating income fell by 10.4% only in 2020, operating profit fell by 98% in 2020, and net profit lost for three of the five years before turning around in 2021. The income statement shows that other financial expenses are very high, reaching 180 million.

The asset-liability ratio is relatively high, reaching 82%, with total assets of 7.89 billion and net assets of 1.45 billion, while goodwill and intangible assets are 3 billion, of which goodwill is 2 billion.

The current price-to-earnings ratio of 16.7 times earnings will be judged when the quarterly results come out on May 5.

$FRP Holdings(FRPH.US)$Revenue returned to growth after falling nearly 50% in 2018, but operating profit has been declining for the past two years, while net profit has increased sharply in 2021. The three data curves are very awkward. The income statement shows that the income from the sale of securities reached 56 million in 2021. This is the biggest contribution to net profit, but it is difficult to judge sustainability. The current price-to-earnings ratio of 20 times earnings requires more solid growth data.

Let's take a look at the six stocks with a price-to-earnings ratio of more than 25, which is easy to judge, as long as you keep fast-growing or highly discounted stocks.

$eXp World(EXPI.US)$More unique, is a cloud-based real estate economic company, I wanted to do this project in 2015 but failed, did not expect that someone really made it.

Revenue has maintained rapid growth for five years, with a growth rate of less than 100% in only two years. Operating profit reversed in 2020, but increased by only 8% in 2021. Net profit rose 162 per cent to 81.16 million in 2021.

The income statement shows that the cost of the main business increases slightly faster than the operating income, resulting in an increase of only 8% in operating profit. Check the gross profit margin and understand that the gross profit margin of this so-called cloud model is only less than 8%, and a slight change in costs will cause huge fluctuations in profits. The sharp increase in net profit in 2021 is due to an income tax rebate of 47.5 million, which should be a subsidy to high-tech companies and cannot be expected to last forever.

At present, the price-to-earnings ratio of 29 times earnings lacks the support of real earnings growth.

$Transcontinental Realty Investors(TCI.US)$Revenue has not improved much since revenue fell 60% in 2019. Operating profit has been underwater for three years, and net profit is better than nothing. The current price-to-earnings ratio is 36 and the price-to-book ratio of 0.97 is unattractive.

$INDUS Realty Trust(INDT.US)$There is no obvious trend in revenue fluctuations, but operating profit fell sharply by 73.5% in 2020 and only recovered by 16.4% in 2021. Net profit was a loss in 2020 and a turnround in 2021. The biggest additional contribution to net profit in 2021 was that the "proceeds on the sale of securities" reached 22.27 million. The current price-to-earnings ratio of 41 and a price-to-book ratio of 1.9 is unattractive.

$Firstservice(FSV.US)$Revenue grew for five years in a row, but operating profit lost for one year in 2019, and the net profit curve is similar to that of operating profit. The income statement shows that there is an "other operating expenses" 314 million in 2019, but nothing is found.

The asset-liability ratio is 59%, the total assets are 2.5 billion and the net assets are 1 billion, but the goodwill and intangible assets are 1.2 billion.

At present, the price-to-earnings ratio of 43 times earnings is not very attractive.

$CoStar(CSGP.US)$Revenue grew for five years in a row, operating profit fell 20% in 2020, net profit fell 28% in 2020, and 2021 did not exceed the 2019 level. The income statement shows that operating expenses increased by 300 million (42%) in 2020, much higher than the growth rate of revenue (18.5%), resulting in a decline in operating profits. The share of operating expenses returned to normal in 2021, and operating profits increased normally. Net profit before tax in 2021 is higher than in 2019, but income tax is 35 million higher than in 1919, so it is lower after tax.

The current price-to-earnings ratio of 83 is too high.

$Offerpad Solutions(OPAD.US)$It is a new stock listed in December 2020, revenue is growing rapidly, and operating profit and net profit will turn around in 2021, but the gross profit margin is currently only 10% 175 times price-to-earnings ratio, which needs further growth data.

Finally, take a look at 10 loss-making stocks with a price-to-earnings ratio of less than 0.

$PropertyGuru(PGRU.US)$The 2021 results are not yet available, and revenue fell by 7.2% in 2020. There are too few data to judge.

$KE Holdings(BEKE.US)$Revenue growth is good. Operating profit sharply reversed to 4 billion in 2020, but fell to 450 million in 2021, while net profit lost 500 million in 2021. The income statement shows that the proportion of the cost of the main business has increased significantly in 2021, the gross profit margin has dropped from 23.92% to 19.6%, the proportion of operating expenses has also increased, and the quality of the whole business has changed greatly.

However, the income tax did not fall at all in 2021, and the net profit turned directly into a loss.

The current price-to-book ratio of 1.37 is unattractive.

$RE/MAX Holdings(RMAX.US)$Overall revenue growth in the past three years, but operating profit and net profit are accelerating decline, the current price-to-book ratio of 0.95 is not very attractive.

$The Real Brokerage(REAX.US)$Listed in 2021, revenue has increased in the past two years, while operating losses and net losses have expanded rapidly.

$Colliers International Group(CIGI.US)$Revenue and operating profit increased rapidly except 2020, but net profit slipped into the loss range in 2021. But even with a net profit of 140 million in 2019, the price-to-earnings ratio is 38. If 25 per cent income tax is deducted from operating profit, that is 300 million, the price-to-earnings ratio is 13 per cent, which is not supported by growth data.

$Redfin(RDFN.US)$The operating income has increased rapidly for five years, but the operating profit and net profit have been underwater, and there is a tendency to expand the loss.

$IRSA Propiedades Comerciales(IRCP.US)$It's an Argentine company, and its net profit fluctuates between profit and loss, which is unattractive.

$Opendoor Technologies(OPEN.US)$The net loss has been widening for three years.

$Doma Holdings(DOMA.US)$2The net loss has been widening over the years.

$WeWork(WE.US)$The net loss has been widening for three years.

Overall, the real estate services sector in addition to 2020 overall growth is good, but the profit margin difference is relatively large, the overall valuation is higher, a total of 2 stocks were selected today.

Real estate services sector investment index:⭐️
1. $CBRE Group(CBRE.US)$⭐️⭐️
2. $Jones Lang LaSalle(JLL.US)$⭐️

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