Stock Story -
Residential real estate services company Anywhere Real Estate (NYSE:HOUS) fell short of analysts' expectations in Q2 CY2024, with revenue flat year on year at $1.67 billion. It made a GAAP profit of $0.27 per share, improving from its profit of $0.17 per share in the same quarter last year.
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Anywhere Real Estate (HOUS) Q2 CY2024 Highlights:
- Revenue: $1.67 billion vs analyst estimates of $1.69 billion (1.3% miss)
- EPS: $0.27 vs analyst expectations of $0.33 (18.9% miss)
- Gross Margin (GAAP): 33.6%, down from 34.6% in the same quarter last year
- Free Cash Flow of $63 million is up from -$145 million in the previous quarter
- Market Capitalization: $524.4 million
Formerly known as Realogy Holdings, Anywhere Real Estate (NYSE:HOUS) is a residential real estate company with a network of brokerages, franchises, and settlement services.
Real Estate ServicesTechnology 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.
Sales GrowthA company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one tends to grow for years. Anywhere Real Estate struggled to generate demand over the last five years as its sales were flat. This is a tough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or emerging trend. Anywhere Real Estate's recent history shows its demand has stayed suppressed as its revenue has declined by 15.8% annually over the last two years.
This quarter, Anywhere Real Estate missed Wall Street's estimates and reported a rather uninspiring 0.1% year-on-year revenue decline, generating $1.67 billion of revenue. Looking ahead, Wall Street expects sales to grow 10.6% over the next 12 months, an acceleration from this quarter.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Anywhere Real Estate broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.
Anywhere Real Estate's free cash flow clocked in at $63 million in Q2, equivalent to a 3.8% margin. The company's cash profitability regressed as it was 2.5 percentage points lower than in the same quarter last year, but it's still above its two-year average. We wouldn't read too much into this quarter's decline because investment needs can be seasonal, causing short-term swings. Long-term trends trump temporary fluctuations.
Key Takeaways from Anywhere Real Estate's Q2 Results We struggled to find many strong positives in these results. Its EPS missed and its revenue fell short of Wall Street's estimates. Overall, this was a bad quarter for Anywhere Real Estate. The stock remained flat at $4.72 immediately following the results.
