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Strong growth at Rightmove

The property platform's shares suffered despite stellar growth
February 27, 2017

Online property marketplace Rightmove (RMV) revealed another period of impressive growth in its latest results announcement, although the property website will have to contend with a faltering domestic real estate market and increased competition on the digital front.

IC TIP: Hold at 4033p

The number of advertisers using the site was up 2 per cent, with more than 1m properties advertised - a third more than its nearest competitor. The company has got better at wringing money from the advertisers, too, with average revenue per user up 11 per cent to £842. Despite these solid numbers, the shares dropped nearly 6 per cent on fears that lower transaction volumes in the wider housing market could lead to reduced agent numbers, new home developments and advertising budgets. Sentiment also wasn't helped by news that chief executive Nick McKittrick, who has been at the firm for 16 years, is to retire in May.

Rightmove continued to strengthen its balance sheet. Cash generated from operating activities was up 18 per cent to £169m thanks to the company's low working capital needs and subscription model. And the cash conversion rate was once again in excess of 100 per cent.

Analysts at Numis are forecasting pre-tax profit of £182m, giving underlying diluted EPS of 154p in 2017 (from £166m and 141p in 2016).

 

RIGHTMOVE (RMV)

ORD PRICE:4,033pMARKET VALUE:£3.75bn
TOUCH:4,032-4,034p12-MONTH HIGH:4,416pLOW: 3,159p
DIVIDEND YIELD:1.3%PE RATIO:29
NET ASSET VALUE:8.6p*NET CASH:£13.7m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201211983.361.323
201314097.074.128
201416712297.735
2015192137114.043
2016220162137.951
% change+15+18+21+19

Ex-div: 4 May

Payment: 2 Jun

*Includes intangible assets of £3.5m, or 4p a share