The real estate market is expected to grow due to increasing demand for efficiency in property management, urbanization, and technological innovation. Therefore, fundamentally strong real estate stocks, Marcus & Millichap, Inc. (MMI), Newmark Group, Inc. (NMRK), and RE/MAX Holdings, Inc. (RMAX), might be worthy watchlist additions for capitalizing on the property market.
The global real estate market is expected to grow at a CAGR of 9.3% by 2030. This growth is driven by several key factors, including increased urbanization rates in emerging economies, advancements in construction technology, and shifting consumer preferences towards sustainable and smart building solutions.
Additionally, technological advancements are revolutionizing the realty industry, impacting how properties are marketed, transacted, and managed. Proptech innovations, including virtual reality tours, artificial intelligence in property management, and blockchain for transparent and secure transactions, enhance the efficiency and accessibility of realty processes.
Considering this favorable backdrop, let’s assess the fundamentals of the three Real Estate Services picks.
Stock #3: Marcus & Millichap, Inc. (MMI)
MMI is an investment brokerage company that provides real estate investment brokerage and financing services to sellers and buyers of commercial real estate in the United States and Canada.
In terms of the trailing-12-month asset turnover ratio, MMI’s 0.73x is 446.8% higher than the 0.13x industry average. Its 4.45x trailing-12-month cash per share is 621.5% higher than the 0.62x industry average.
MMI’s total revenues for the fiscal third quarter that ended September 30, 2024, increased 4% year-over-year to $168.51 million. Its real estate brokerage commissions grew 1.5% year-over-year to $141.97 million.
In addition, the company’s cash and cash equivalents stood at $172.72 million as of September 30, 2024, compared to $170.75 million as of December 31, 2023.
For the fourth quarter ending December 2024, MMI’s revenue is expected to increase 13% year-over-year to $187.80 million. MMI surpassed the consensus EPS estimates in each of the trailing four quarters.
MMI gained 35.9% over the past six months to close its last trading session at $42.12.
MMI’s POWR Ratings reflect its outlook. MMI has a B grade for Growth. It is ranked #18 out of 45 stocks in the Real Estate Services industry. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
For additional MMI’s Momentum, Sentiment, Quality, Stability, and Value, click here.
Stock #2: Newmark Group, Inc. (NMRK)
NMRK provides commercial real estate services internationally. The company offers capital markets consisting of investment sales and commercial mortgage brokerage; landlord or agency representation leasing; valuation and advisory; property management; commercial real estate technology platform and capabilities; and other advisory services.
NMRK’s 0.55x trailing-12-month asset turnover ratio is 317.2% higher than the industry average of 0.13x. Furthermore, the stock’s 7.52% trailing-12-month dividend yield to dividend payout ratio is 173.5% higher than the industry average of 2.75%.
NMRK’s revenue increased 11.3% year-over-year to $685.91 million during the third quarter ended September 30, 2024. The company’s net income available to common shareholders increased 78.9% year-over-year to $17.79 million and grew 66.7% year-over-year to $0.10 per share.
Street expects NMRK’s revenue for the fourth quarter ending December 2024 to increase 5% year-over-year to $784.83 million. For the same quarter, the company’s EPS is expected to grow 1.6% year-over-year to $0.47. Furthermore, the company surpassed the consensus revenue estimates in each of the trailing four quarters.
NMRK’s stock has gained 43.7% over the past nine months and 84% over the past year to close the last trading session at $15.35.
NMRK’s POWR Ratings reflect prospects. NMRK has a B grade for Growth. It is ranked #13 in the same industry.
For additional NMRK’s Momentum, Sentiment, Quality, Stability, and Value, click here.
Stock #1: RE/MAX Holdings, Inc. (RMAX)
RMAX operates as a franchisor of real estate brokerage services in the United States, Canada, and internationally. It operates through Real Estate; Mortgage; and Marketing Funds segments.
RMAX’s 74.05% trailing-12-month gross profit margin is 12.9% higher than the industry average of 65.62%. Furthermore, the stock’s 5.88% trailing-12-month ROTC is 175% higher than the industry average of 2.14%.
RMAX’s total revenue for the third quarter ended September 30, 2024, was reported at $78.48 million. Net income attributable to RMAX came in at $966 million, compared to a net loss of $59.45 million. Net income attributable to RMAX per share of class A common stock at $0.05, compared to net loss per share of $3.28 in the previous-year quarter.
The stock gained 30.4% over the past six months to close the last trading session at $40.88.
RMAX’s fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
RMAX also has a B grade for Value, Quality, and Growth. It is ranked #6 in the same industry.
Beyond what is stated above, we’ve also rated RMAX for Momentum, Sentiment, and Stability. Get all RMAX ratings here.
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RMAX shares were trading at $12.46 per share on Monday afternoon, down $0.04 (-0.32%). Year-to-date, RMAX has declined -6.53%, versus a 28.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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