Rightmove’s Resilience Shines Through Housing Downturn: Earnings Grow 10%
In 2022, despite a housing downturn and rising inflation, Rightmove experienced a 10% growth in earnings. As a member of the FTSE 100, Rightmove presents an attractive opportunity for investors.
The company’s financials are healthy and may soon return cash to shareholders. Despite a 30% drop in share prices, analysts believe Rightmove’s business is strong and moving in the right direction.
Last week, Rightmove’s stock price dropped while the FTSE rose, indicating that the market was disappointed with the company’s earnings. Despite several challenges, Rightmove reported earnings of £334 million, with earnings per share reaching 23.4p.
The platform’s user engagement levels were above pre-COVID-19 in 2019, with users spending more time on the platform. Rightmove has also returned £198 million to stakeholders through buybacks and dividends.
Amidst the ongoing CEO change, some investors and analysts perceive the transition as risky for Rightmove’s stock performance. A change in leadership always causes uncertainty in companies.
However, there are many factors to consider that suggest Brooks-Johnson is entering a strong position. First, Rightmove has zero debt, making it less vulnerable to fluctuating market conditions.
The company is a leader in the property market and has low competition, which adds stability to its operations. Furthermore, Rightmove is difficult to disrupt, given its robust infrastructure and well-established brand. Its low operating costs make it an attractive proposition for investors looking for a profitable business with a solid foundation.
Rightmove’s growth of 10% may seem small for a company with a P/E ratio of 25. However, the company has several strategies to boost its earnings potential. The first approach is to increase prices for advertisers.
Rightmove’s business model is based on a user base that estate agents and home builders require, giving them pricing power and a potential exit from their low earnings situation. In 2022, the company reported an 11% increase in advertiser revenue, but the number of advertisers remained stagnant.
The second way is by expanding into other markets. Rightmove has already been developing platforms and expanding abroad, and this strategy could result in substantial growth in the future.
Finally, Rightmove can boost its earnings by repurchasing its shares to give it a greater claim to its overall earnings and improve its stock performance.
Rightmove’s P/E ratio may make its price seem high, but analysts say it has the best growth prospects in the FTSE. This statement is because the company has several intrinsic strengths, including its dominant position in the online real estate sector ad low operating costs.
Additionally, the company’s motivation to innovate and improve its offerings in the sector is growing daily, making it an attractive stock for investors looking for growth opportunities.