Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at The Real Brokerage (NASDAQ:REAX) and the best and worst performers in the real estate services industry.
Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.
The 14 real estate services stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 13.1% below.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Luckily, real estate services stocks have performed well with share prices up 14.6% on average since the latest earnings results.
Best Q2: The Real Brokerage (NASDAQ:REAX)
Founded in Toronto, Canada in 2014, The Real Brokerage (NASDAQ:REAX) is a technology-driven real estate brokerage firm combining a tech-centric model with an agent-centric philosophy.The Real Brokerage reported revenues of $340.8 million, up 83.9% year on year. This print exceeded analysts’ expectations by 28.9%. Overall, it was an incredible quarter for the company with an impressive beat of analysts’ earnings estimates.
“Real achieved outstanding results in the second quarter, surpassing our own expectations and achieving new highs in Revenue and Gross Profit," said Tamir Poleg, Real’s Chairman and Chief Executive Officer.
The Real Brokerage scored the biggest analyst estimates beat and fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 4.5% since reporting and currently trades at $5.21.
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Zillow (NASDAQ:Z) (NASDAQ:ZG)
Founded by Expedia (NASDAQ:EXPE) co-founders Lloyd Frink and Rich Barton, Zillow (NASDAQ:ZG) is the leading U.S. online real estate marketplace.Zillow reported revenues of $572 million, up 13% year on year, outperforming analysts’ expectations by 6.3%. The business had an exceptional quarter with an impressive beat of analysts’ operating margin and earnings estimates.
The market seems happy with the results as the stock is up 51.1% since reporting. It currently trades at $61.
Weakest Q2: Offerpad (NYSE:OPAD)
Known for giving homeowners cash offers within 24 hours, Offerpad (NYSE:OPAD) operates a tech-enabled platform specializing in direct home buying and selling solutions.Offerpad reported revenues of $251.1 million, up 9.1% year on year, falling short of analysts’ expectations by 11.4%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations.
Offerpad delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 14.1% since the results and currently trades at $3.35.
Marcus & Millichap (NYSE:MMI)
Founded in 1971, Marcus & Millichap (NYSE:MMI) specializes in commercial real estate investment sales, financing, research, and advisory services.Marcus & Millichap reported revenues of $158.4 million, down 2.8% year on year. This result missed analysts’ expectations by 1.5%. All in all, it was a mixed quarter for the company.
The stock is down 3.5% since reporting and currently trades at $37.15.
JLL (NYSE:NYSE:JLL)
Founded in 1999 through the merger of Jones Lang Wootton and LaSalle Partners, JLL (NYSE:JLL) is a company specializing in real estate advisory and investment management services.JLL reported revenues of $5.63 billion, up 11.4% year on year. This print met analysts’ expectations. More broadly, it was a mixed quarter as it also recorded a decent beat of analysts’ earnings estimates but a miss of analysts’ Work Dynamics revenue estimates.
The stock is up 16.2% since reporting and currently trades at $269.99.
This content was originally published on Stock Story
