The Flight Centre Travel Group Ltd (ASX:FLT) share price is down 22.3% since the start of 2024. The Rea Group Ltd (ASX:REA) share price is tracking 63.2% off its 52-week lows.
FLT share price in focus
Founded in Sydney in 1982, Flight Centre is a travel agency that operates under multiple names across over 80 countries.
It’s involved in both the retail and corporate sectors and also offers additional services such as tour operations, travel experiences and hotel management.
Flight Centre aims to offer a personal touch that many online travel agencies might not have. Consultants are able to handle all the work involved and are often able to find exclusive deals for their customers, which keeps them coming back.
REA shares
Founded in 1995, REA Group is a Melbourne-based real estate advertising company that is majority-owned by News Corp. In Australia, it’s best known for its Realestate.com.au platform.
REA Group operates on a global scale and now operates property websites in around 10 countries used by some 20,000 agents. In a typical month, the core Australian website gets over 55 million visits. While the business has diversified globally, Australian operations still account for the lion’s share of revenue. Within Australia, REA makes money by listing properties for sale or rent (i.e. the agent uses REA’s website to show properties, which the property owner is on the hook to pay). It also makes money from financial services (e.g. mortgage broking), but this is a much smaller part of the business.
FLT share price valuation
As a growth company, one way to put a rough guesstimate on the FLT share price could be to compare its price-to-sales multiple over time. Currently, Flight Centre Travel Group Ltd shares have a price-sales ratio of 1.30x, compared to its 5-year average of 3.42x, meaning its shares are trading below their historical average. This could mean that the share price has fallen, or sales have increased, or both. In the case of FLT, revenue has been growing over the last 3 years. Please keep in mind that context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric.
The REA share price currently trades at a price-sales ratio of 18.07x, which compares to its 5-year long-term average of 17.41x. So, its shares are trading higher than their historical average. However, a simple multiple like this should only be the start of your research. The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! Just remember there are many different ways to value a share, like Rea Group Ltd.
