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Property healthcheck: How have agents been faring on the stockmarket?

It has been a busy reporting season for listed estate agents marked by the Stamp Duty rush and uncertainty over the European Union referendum.

Most have seen their stock fall so far this year in the period between January and May, with price-to-earnings ratios, a measure of the share price relative to earnings, ranging from 10 to 19.

The p/e ratio provides a useful way of comparing the value of companies, but there are plenty of reasons it could be high or low. A low p/e could mean a business is undervalued or it could be that it is facing tricky times, while a high ratio could mean business is booming or that a firm is overvalued in the sector.

The average p/e ratio among the listed firms below, other than Purplebricks which hasn’t reported earnings yet, is 14.83. Half trade with a p/e ratio under the figure and the rest above.

EYE has rounded up the key figures of the reporting season to see how well the industry has done on the stockmarket so far this year.

LSL Property Services

LSL Property service, which last month announced the resignation of executive Adrian Gill, saw group revenues increase 16.9% year-on-year in the first quarter of 2016.

Estate agency revenue increased 19.9% year-on-year while lettings income was up 13%.

Its shares have gone up 7.92% this year to 307p giving it a market cap of £315m and p/e ratio of 10.47.

Winkworth

Winkworth has reported a 6.7% revenue boost to £5.87m for 2015, but pre-tax profits were down 1% to £1.91m.

Its shares are down 1.48% at 133p giving it a market cap of £17.13m and p/e ratio of 11.1.

Foxtons

Foxtons reported revenue was up 16.2% year-on-year in the first quarter to £38.4m. It said this boost was principally driven by a 28.5% increase in property sales commissions in the run up to the stamp duty deadline.

However, its share price is down 21% so far this year at 153.88p giving it a p/e ratio of 12.55.

Nic Budden, chief executive, said: “We have had a strong start to the year with a record first quarter driven by a number of sales transactions being brought forward before the introduction of the additional stamp duty surcharge on buy-to-let properties.

“Nevertheless, we expect the first half of the year to be challenging with a reduced sales pipeline entering into Q2 and the underlying short term impact on transaction volumes from the uncertainty around the European referendum. Our expansion strategy remains on track as we continue to increase our market share in outer London.”

Savills

Savills is currently on a p/e ratio of 16.43 after seeing its share price fall 13.88% so far this year to 763p.

In its latest update, the firm issued a statement to coincide with its annual general meeting on 11 May for its year to date performance.

According to the statement, Savills’ prime residential market had performed “better than our expectations, boosted by a spike in activity in advance of the stamp duty increase last month.”

However, the statement warned that the volume of activity has since moderated in advance of the EU referendum.

The statement concluded: “While we have started the year well, typically the first four months represent a disproportionately small element of the expected out-turn for the full year. We have continued to develop the business with selective acquisitions and recruitments in a number of our service lines and are focused on integrating these through the remainder of the year.

“Although certain markets are currently being affected by the forthcoming EU referendum and US election, currently our expectations for the year remain unchanged.”

Countrywide

Countrywide shares are down 11.64% so far this year at 352p giving a market capitalisation of £766million and p/e ratio of 18.79.

Its most recent update was for the first quarter of the year in April. It announced that sales were up by almost one third in the run-up to the stamp duty changes.

The statement came after senior management culls and amid disgruntled shareholder sentiment over executive pay.

In a remarkably thin trading update, consisting of just 396 words, Countrywide said it expects the housing market to slow in the second quarter of this year.

Chief executive Alison Platt said: “We are encouraged by the strong performance delivered in the first quarter and remain on track to pilot our customer focused multi-channel proposition in three brands during the second quarter.

“Mindful of the political and economic uncertainty surrounding the EU referendum we are taking a cautious view of the coming months.

“Notwithstanding this, however, we continue to expect to make strong progress in 2016 as we execute our strategy and maximise market opportunities and therefore maintain our current financial outlook for the full year.”

The next trading update is expected to be its 2016 half year results, to be issued in July.

Martin & Co

Martin & Co’s shares are up 3.87% so far this year to 163p on a p/e of 17.38. It has a market capitalisation of £37m.

The business announced full year results for 2015 in April, reporting group revenue had increased 38% to £7.1m, while pre-tax profits were up 42% to ££2.7m.

It was described by chief executive Ian Wilson as the company’s “most successful year to date”.

Belvoir

Franchise chain Belvoir’s share price is up 5.63% to 122p giving it a market capitalisation of £38m and p/e ratio of 19.64.

It has seen group revenues for 2015 rise 19% to £6.9m, with pre-tax profits up 25% to £2.2m.

Last year, described as ‘pivotal’, was marked by the acquisition of franchise businesses Newton Fallowell and Goodchilds at a total cost of £9.5m.

It is also celebrating the success of its acquisition of Newton Fallowell, which has hit its targets early, so Belvoir is issuing new shares.

Purplebricks

Online agent Purplebricks used a trading update this week to say it expects revenue to rise around 445% to £18.5m to the year ended April 30.

Purplebricks, which listed on the alternative investment market at the end of last year, also said it was on track to meet its full-year expectations.

It has seen its share price rise 72.9% so far this year to 165p but is yet to report any earnings.

It will report its first results on June 16

http://www.propertyindustryeye.com/property-healthcheck-how-have-agents-been-faring-on-the-stockmarket/

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Estate Agents, Mortgages, Architects, Engineers, Housebuilders, Construction, BTL.

Wouldnt like to be one of those in the near future.

London especially, seems to be saturated with estate agents.

They've had a good run....lot of government support...more than any other industrry ever gets.

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