REA Group is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.
REA Group announced that its results for the nine months ended 31 March 2019. Reported 3Q revenues up 7% and EBITDA up 6%. The result highlights the quality of the REA business, with solid growth despite a very challenging macro environment.
If we assume FY20 revenue of $990mn, EBIT $520mn and DPS of $1.50, it places REA on a forward yield of 1.8%.
Underlying earnings growth in FY20 is forecast to be up 12%.
REA Group has announced the sale of its European assets to Oakley Capital Private Equity for $190m. Profit on the sale is expected to be around $170m. REA Group should see earnings pickup into 2017 & 2018 with FY18 revenue likely to grow by 10% to $850m and EBIT by 15%+ to $420m.
FY17 DPS $0.90 and FY18 DPS $1.10, places the stock on a forward yield of 2.1%.
REA payout 50% of earnings and the dividend is fully franked. The recent algo buy signal at $46 provided a solid entry point. We recommend applying a stop-loss on a break below the November low of $45.50