REA Group Shares Down Despite 13% Lift in Revenue [ASX:REA]

The REA Group Ltd [ASX:REA] released its FY21 results with revenue and dividends up by 13% and 19%, respectively.

At time of writing, however, the REA share price is at $157.8 per share, down 5.5%.

ASX REA - Rea Group Share Price Chart

Source: Tradingview.com

Despite today’s dip, the REA stock is up 40% over the last 12 months.

Today’s drop may suggest some investors believe that this is the right time to take profits and exit.

REA reports solid FY21 results

REA Group — owner of several real estate internet sites including realestate.com.au — posted strong FY21 results.

Company Presentation

Source: Company presentation

Revenue rose 13% to $928 million from $820 million in FY21. And EBITDA increased 19% to $565 million.

Profit rose 18% to $318 million and earnings per share (EPS) went up 21% to $2.47.

In short, REA made a solid comeback after the pandemic impacted FY20.

The strong performance encouraged the board to pay a final dividend of 72 cents per share fully franked.

The final dividend combined with interim dividend brings the total dividend to $1.31 per share. This represents a 19% increase on the prior year.

There is no doubt 2020 was a challenging time for many firms, REA included.

For instance, in FY20, REA reported a 6% drop in revenue and a 9% drop in net profit, choosing to reduce its total dividend to 110 cents per share, down from 118 cents in FY19.

However, the Australian residential market recovered strongly this year on the back of positive buying behaviour.

National listings in FY21 were up 15% YoY, with Melbourne up 11% and Sydney up 25%.

Further, the online presence of buyers was also enhanced as the average monthly visits to realestate.com.au topped 121.9 million.

REA Group CEO Owen Wilson was also impressed by the company’s exceptional performance:

 

This has been a defining year for REA, successfully navigating the pandemic to deliver an excellent financial result and emerge an even stronger business.

I am very proud of our team’s ability to respond to the changing needs of our customers and consumers during the pandemic, while also accelerating our growth strategy through a number of pivotal investments.

What’s the outlook for the REA share price?

Many businesses were struggling and facing losses when the pandemic hit last year.

The real estate sector was one of the first affected, with the company reporting a ‘challenging’ Q1 FY21 impacted by Melbourne’s lockdowns.

But the coin flipped for REA once the vaccinations started to roll out and people were back exploring real estate.

As a result, REA posted strong FY21 results and, despite COVID-related volatility, the market dynamics remain strong, with solid levels of buyer enquiry underpinned by low interest rates and healthy bank liquidity.

With solid 13% revenue growth and a 19% increase in its full-year dividend, REA’s outlook looks promising.

Dividend stocks like REA can be a good way to diversify your portfolio.

So, if you’re interested, check out our free dividend report to get your hands on the five dividend stocks that could succeed in 2021 and beyond.

Regards,

Lachlann Tierney,

For Rum Rebellion

PS: The Rum Rebellion is a fantastic place to start your investment journey. We talk about the big trends driving the Australian Economy. Learn all about it here.


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 


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