REA share price in focus
REA Group, best known for its realestate.com.au platform, is a Melbourne-based real estate advertising company majority-owned by News Corp.
Today, REA Group operates property websites in around 10 countries used by some 20,000 property 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 bulk of revenue. Within Australia, REA makes money by listing properties for sale or rent and charging listing fees. They also have a financial services arm offering services like mortgage broking, but this is a much smaller part of the business.
REA’s competitive advantages, like any other established platform, are network effects and economies of scale. In other words, Domain (the #2 market player) is significantly smaller than REA in terms of users and views. This gives REA greater market power and pricing control. REA also benefits from owning assets across all parts of real estate, including listing, advertising, mortgage broking, and house sharing.
QAN shares
Founded in 1921, Qantas is Australia’s largest airline operator, with the biggest fleet, the most international flights, and the widest range of destinations.
The airline operates both domestic and international flights, offers freight services, and manages the popular frequent flyer loyalty program.
Additionally, Qantas owns Jetstar, giving it considerable pricing and market influence within the highly concentrated Australian airline industry.
REA share price valuation
As a growth company, one way to put a broad estimate on the REA share price could be to compare its price-to-sales multiple over time. This can tell us how the company has historically been valued relative to its total revenue.
Currently, Rea Group Ltd shares have a price-sales ratio of 18.45x, compared to its 5-year average of 17.41x, meaning its shares are trading above their historical average. This could mean that the share price has increased, or that sales have declined, or both. In the case of REA, revenue has been growing over the last 3 years. Of course, context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric, but this can be a rough starting point.
Since it is a more of a ‘blue chip’ company, we could look at the dividend yield of QAN to determine its value. If we compare it to the historical dividend yield, we can get a sense of the stability of the company and its ability to pay out income. QAN is offering a trailing dividend yield of around 0.00%, which compares to its 5-year average of 1.22%. Of course, this is just one of many ways you could put a value on QAN shares. The Rask websites offer free online investing courses, created by analysts explaining valuation methods like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! It’s important to look at multiple methods when you’re trying to value the QAN share price.
