It’s time to breakdown another real estate technology name. Here is the breakdown on $RDFN, otherwise known as Redfin.
Current Price: $90.70
52/Wk High: $98.45
52/Wk Low: $9.63
Market Cap: $9.2 Billion
Read below for the breakdown!
Redfin ($RDFN) is an up and coming residential real estate company which operates a technology platform that gives customers the tools to buy and sell homes in a much more efficient and cost effective manner.
In recent news, Redfin announced that the company is acquiring RentPath, another digital real estate company that owns ApertmentGuide.com and Rentals.com for a total of $608 million.
Taking a look at RentPath, the company maintains more than 20,000 apartment buildings on its websites and increased their traffic by 25% in 2020.
Management is positive they will boost RentPath’s numbers.
"We can almost double that audience, as one in five of Redfin.com's 40+ million monthly visitors also wants to see homes for rent. Together with RentPath, we can create an online destination for every North American to find a home." CEO Glenn Kerman of Redfin said.
Throughout the past year the “digital revolution” stocks have seen a major boost and Redfin is no different, moving 178% to the upside in just the last year, leaving investors to wonder if Redfin is still a buy.
Digging into the numbers, Redfin beat Q3 2020 expectations with an EPS of $0.30, better than the analysts consensus estimate of $0.25. On a year over year basis, EPS improved 328.57%.
Leadership went on to report Q3 revenues of $237 million, representing a 1% decline on a year over year basis.
On a positive note, Redfin delivered a gross profit of $93 million for Q3, a big jump from the $53 million in gross profit from Q3 2019, representing a 74% increase in gross profit on a year over year basis.
Furthermore, net income totaled $34.2 million, a huge increase off the same time 2019 net income level of $6.8 million.
Shifting into operating expenses Redfin reported Q3 operating expenses of $56 million, representing a 22% increase and 24% of revenues. The increase was expected given continued growth of the company.
As for market share, Redfin reported that the company reached a market share of 1.04% in the US existing homes sales market. The Q3 market share level is a strong increase of .08% since Q3 of 2019.
Visitors also continued to grow, with Redfin visitors increasing by a strong 38% throughout Q3 which resulted in Redfin conducting roughly 21,000 video tours throughout the quarter.
Management was upbeat about the quarter.
“Redfin’s increasing share of North America’s online real estate audience, coupled with a strong housing market, has generated demand faster than we can recruit agents, lenders and partners,” Kelman said.
When it comes to guidance, management is bullish, expecting Q4 revenues to land within a range of $226 million to $233 million along with a net income between $2 million to $5 million.
Shifting into the balance sheet the numbers are solid.
Total Debt: $180 Million
Total Liabilities: $323 Million
Total Assets: $763 Million
Cash & Short Term Inv: $501 Million
On a valuation basis Redfin does trade at a premium.
Price to Sales: 9.87x
Price to Book: 23.54x
Price to Cash Flow: 66.27x
Management has done a solid job but could be more effective.
Return on Equity: -11.86%
Return on Assets: -5.95%
Return on Invested Capital: -8.07%
Given the numbers the analysts are bearish with a mean price target of $74.40/share, representing a -17.97% downside.
It is also important to note that the high price target is $86.00/share, representing a -5.18% loss, while the low price target is $65.00/share, representing a -28.34% downside.
The big money on the other hand is quite involved with 88.06% of Redfin being owned by institutions. Top holders include The Vanguard Group, Durable Capital Partners, and Baillie Gifford & Co..
On a technical basis Redfin is bullish. According to the six-month charts the MACD has continued to move to the upside within a tight range around 4.73.
The six-month charts are also indicating an RSI of 58.54 and CCI 42.58, both of which are on the high end.
In short, Redfin is a solid company with continual growth, a strong management team, and plenty of market share to grow into. Redfin is a solid long term investment based on its fundamentals and will likely be a leader in the real estate technology space.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.