Seattle, Wash.-based Residential real estate brokerage company Redfin Corporation’s (RDFN) total revenue increased 163% year-over-year to $643.06 million in its fourth quarter, ended December 31, 2021. However, its net loss came in at $27 million, compared to $14.04 million in net income in the year-ago period. Its loss per share was $0.27, compared to an EPS of $0.11 in the prior-year quarter. Furthermore, analysts expect its EPS to remain negative in 2022 and 2023. Also, its trailing-twelve-month EBITDA and net income margins are currently negative, compared to the 54.84% and 17.77% respective industry averages.
The stock has declined 73.5% in price over the past year to close the last trading session at $22.86. Also, in terms of forward Price/Book, RDFN’s 8.83x is 352.9% higher than the 1.95x industry average. In addition, its 85.52x forward P/CF is higher than the 15.73x industry average. So, it looks overvalued.
However, the overall real estate services market has maintained steady growth. Demand for residential and commercial spaces has continued surging throughout the pandemic owing to the remote lifestyle, despite a supply crunch driving prices higher. According to Report Linker, the global real estate market is expected to grow at a 10.5% CAGR through 2022.Therefore, we think investors looking to benefit from the industry’s growth could instead bet on quality real estate services stocks Colliers International Group Inc. (CIGI), Cushman & Wakefield plc (CWK), and Marcus & Millichap, Inc. (MMI).
Colliers International Group Inc. (CIGI)
Headquartered in Toronto, Canada, CIGI provides commercial real estate services to corporate and institutional clients in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
On Feb. 10, 2022, Jay S. Hennick, Global Chairman & CEO, CIGI, said, “With a strong global brand and growth platform, proven track record of more than 27 years, a balanced and highly diversified business model, unique enterprising culture, and significant inside ownership, Colliers is better positioned than at any other time in our history to continue creating significant value and superior investment returns for shareholders.”
For its fiscal fourth quarter, ended Dec. 31, 2021, CIGI’s revenues increased 47.3% year-over-year to $1.35 billion. Its adjusted net earnings came in at $109.89 million, up 38.1% year-over-year, while its adjusted EPS came in at $2.25, up 25.7% year-over-year.
CIGI’s revenue is expected to be $4.44 billion for its fiscal 2022, representing an 8.5% year-over-year rise. Furthermore, its EPS is expected to increase 20% per annum over the next five years. It surpassed EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 44.7% in price to close the last trading session at $148.19.
CIGI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
In addition, it has a B grade for Growth, Momentum, and Sentiment. CIGI is ranked #5 of 44 stocks in the Real Estate Services industry. Click here to see the additional POWR Ratings for CIGI (Value, Stability, and Quality).
Cushman & Wakefield plc (CWK)
Based in London, the United Kingdom, CWK and its subsidiaries provide commercial real estate services under the Cushman & Wakefield brand in the United States, Australia, the United Kingdom, and internationally. The company operates through three segments: Americas; Europe, Middle East, and Africa; and Asia Pacific.
On Jan.5, 2022, CWK announced the complete acquisition of long-time alliance member Pacific Commercial Realty Advisors, which is in Central California and Idaho. Dan Broderick, President of the West Region, CWK, said, “We are thrilled in having PACCRA join Cushman & Wakefield, which cements our long-term partnership with a shared vision and mission of collaboration, innovation, and delivering exceptional value to our clients while also enhancing our business in these markets.”
CWK’s total revenue came in at $2.33 billion for the third quarter, ended Sept. 30, 2021, up 20.8% year-over-year. Its adjusted net income was $108.9 million, up 198.4% year-over-year, while its adjusted EPS came in at $0.48, up 200% year-over-year.
For its fiscal 2022, CWK’s revenue is expected to increase 7% to $7.04 billion. Its EPS is expected to grow 22.8% to $2.10 in 2022. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 50% in price to close the last trading session at $22.62.
CWK has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B grade for Momentum and Sentiment. CWK is ranked #9 in the Real Estate Services industry. Click here to see the additional POWR Ratings for CWK (Value, Stability, and Quality).
Marcus & Millichap, Inc. (MMI)
MMI, a Calabasas, Calif.-based investment brokerage company, provides real estate investment brokerage and financing services to sellers and buyers of commercial real estate in the United States and Canada.
On Feb.18, 2022, Hessam Nadji, MMI’s President and CEO, said “The company’s significant investment in proprietary tools and technology, elevated branding and client outreach campaigns and key acquisitions over the past several years were direct and meaningful contributors to our results. We are pleased to have captured strong growth in our core, private client business while diversifying into larger, institutional transactions and growing our financing business.”
For the fourth quarter, ended Dec. 31, 2021, MMI’s total revenues came in at $495.13 million, up 97.9% year-over-year. Its comprehensive income increased 163.1% year-over-year to $61.16 million, while its EPS increased 159.3% year-over-year to $1.53.
MMI’s revenue is expected to be $222.60 million for the period ended March 2022, representing a 21% year-over-year rise. In addition, the company’s EPS is expected to increase 27% year-over-year to $0.47 for the same period. It also surpassed EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 28.1% in price to close the last trading session at $48.86.
It is no surprise that MMI has an overall A grade, which equates to a Strong Buy in our POWR Ratings system. It has an A grade for Sentiment and a B grade for Growth, Momentum, and Quality.
MMI is ranked #1 in the Real Estate Services industry. Click here to see the additional POWR Ratings for MMI (Value and Stability).
CIGI shares were trading at $144.82 per share on Tuesday afternoon, down $3.37 (-2.27%). Year-to-date, CIGI has declined -2.58%, versus a -9.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
Forget Redfin, Buy These 3 Real Estate Services Stocks Instead StockNews.com
