- The shares have more than doubled in value over the past 12 months thanks to a resurgent housing market
- Exiting Canada and Australia helped the group turn its first pre-tax profit
Estate agencies have delivered some of the highest total returns of all UK real estate stocks over the past 12 months, helped by a thriving housing market. After falling to an all-time low in April last year, shares in Purplebricks (PURP) have more than doubled in value. Senior independent non-executive director Simon Downing has bought into that recovery rally, purchasing more than £250,000 of shares in the group.
Housing transactions have staged a sharp rebound since the government introduced a stamp duty holiday on properties valued up to £500,000. Ahead of the initial deadline, sales agreed in March stood at almost 162,000, according to TwentyCi, a record since the property data company began collating the figures in 2016.
However, broader market drivers are not the only reason for improved sentiment towards Purplebricks shares. In November management revealed that an increase in new instructions of around a fifth meant adjusted cash profits for the first half of the financial year would be comfortably ahead of market consensus.
Exiting the US and Australia cut marketing costs by almost a quarter and led the hybrid estate agency to report its first pre-tax profit for any full-year or interim period since IPO in 2015.
The consensus forecast for earnings per share stands at 1.11p for the 12 months to April, rising to 1.57p the following year. At 105p, that leaves the shares valued at a lofty price/earnings multiple of 94. Given the uncertainty over how long the housing market boom will endure and high costs incurred as it seeks to grow market share, that seems an overvaluation. Sell.
Last IC view: Hold, 90p, 15 Dec 2020
| Buys | ||||
| Company | Director/PDMR | Date | Price (p) | Aggregate value (£) |
| Boot (Henry) | Timothy Andrew Roberts (ce) | 06 Apr 2021 | 269-71 | 99,761 |
| Clarkson | Heike Truol | 06 Apr 2021 | 2,799 | 44,978 |
| Circassia | Ian Johnson (ch) | 01 Apr 2021 | 29 | 28,500 |
| Circassia | Michael Roller (cfo) | 01 Apr 2021 | 29 | 50,593 |
| Circassia | Johnthan Emms (coo) | 01 Apr 2021 | 29 | 19,984 |
| Everyman Media | Alex Scrimgeour (ce) | 08 Apr 2021 | 150 | 179,033 |
| Hill & Smith | Paul Simmons (ce) | 07 Apr 2021 | 1,504 | 55,137 |
| M&C Saatchi | Colin Jones | 01 Apr 2021 | 144 | 44,978 |
| Ocean Wilsons Holdings | Fiona Beck | 08 Apr 2021 | 842 | 42,100 |
| Purplebricks | Simon Downing | 06 Apr 2021 | 97 | 250,921 |
| RA International | Sangita Shah (ch) | 06 Apr 2021 | 46 | 49,910 |
| Watches of Switzerland | Tea Colaianni | 01 Apr 2021 | 663 | 29,954 |
| Watches of Switzerland | Robert Moorhead | 01 Apr 2021 | 673 | 29,996 |
| Watches of Switzerland | Ian Carter (ch) | 01 Apr 2021 | 685 | 109,167 |
| Sells | ||||
| Company | Director/PDMR | Date | Price (p) | Aggregate value (£) |
| essensys | Alan Pepper (cfo) | 06 Apr 2021 | 252 | 315,000 |
| Gamma Communications | Andrew Stone | 07 Apr 2021 | 1,760 | 1,319,856 |
| Gamma Communications | Andrew Stone | 08 Apr 2021 | 1,770 | 885,000 |
| Gamma Communications | Andrew Stone | 09 Apr 2021 | 1,780 | 1,299,699 |
| Greggs | Richard John Hutton (fd) | 06 Apr 2021 | 2,330 | 209,700 |
| Ten Entertainment* | Christopher Mills | 01 Apr 2021 | 229 | 2,286,565 |
| *Christopher Mills is a non-executive director of the issuer and Chief Investment Officer of Harwood Capital LLP | ||||
