REA Group Limited (ASX:REA) share price jumps higher after reporting strong Q3 revenue growth

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The REA Group Limited (ASX:REA) share price has jumped $1.56 or 1.85 per cent higher to $85.86 after the owner of realestate.com.au reported revenue for the 3 months to March 31st 2018 rose by 19 per cent to $186 million.

EBITDA for the quarter also jumped 19 per cent higher to $102 million.

REA said the growth achieved during the quarter is pleasing given listing volumes in Australia were lower due to the timing of Easter.

The company said the financial services segment, which launched in the first half, remains on track to deliver the previous FY18 revenue guidance of between $26m – $30m and EBITDA between $7m – $11m.

Commenting on the results, REA Group Chief Executive Officer, Tracey Fellows, said:

“We continue to extend our audience lead, with app launches reaching a record high of three times more than the nearest competitor.

“We are pleased with the strong momentum our financial services business is building. More than a quarter of a million Australians have created a financial profile on realestate.com.au. They are highly engaged and demonstrate strong intent to look to us to help them purchase their homes.

“The recent acquisition of Hometrack Australia is a natural extension for our Australian business. It means we will be able provide our customers and consumers access to more property data with more accuracy than ever before,” said Ms Fellows.

The REA Group share price is on a roll

REA shares have jumped over 30 per cent higher in the past 12 months.

In March, Citigroup upgraded REA Group to a “buy” from “neutral” noting lower clearance rates for auctions are a leading indicator of volume growth. Citigroup placed a $90 share price target on the company.

REA now sports a market capitalisation of around $11.5 billion. This dwarfs that of its nearest competitor Domain Holdings Australia Ltd (ASX:DHG).

The Domain share price has fallen 2 cents or 0.61 per cent to $3.28 in Friday morning trade, giving it a market capitalisation of around $1.9 billion.

According to estimates from Commsec, REA shares trade on a forward price to earnings ratio (P/E) of around 40 times.

Given its growth rate, its market leadership, and its options for future growth, REA is one of the highest quality ASX tech stocks trading on the Australian share market. 

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Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au