Foxtons, Savills and Countrywide all saw share price drop by more than 22%
It has been a busy reporting season for listed estate agents marked by just one major event, the Brexit vote.
All but one, Belvoir Lettings, have seen their stock fall in the first half of the year, with many being hit in the days after the EU referendum result in June. Foxtons, Savills and Countrywide all saw share price drop 22%, 24% and 31% respectively in the days following the outcome.
So far this year, from January to early August, the price-to-earnings ratios, a measure of the share price relative to earnings, ranges from 7 to 21.
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 reported a loss so doesn’t have a recognisable figure, is 12.6. This is down from 15.19 in May. Just three out of the seven listed companies below trade with a p/e ratio above the average.
Round up the key figures of the reporting season to see how well the industry has done on the stockmarket for the first half of the year.
LSL Property Services
LSL, parent company of estate agency brands including Your Move, Reeds Rains and Marsh & Parsons, reported group revenue for the first half of the year was up 8% to £151.4m, with growth in estate agency up 9%.
Pre-tax profits soared 35% across the group to £8.4m, up from £6.2m for the same period last year.
Lettings income grew strongly by 11% to £34m, up from £30.6m for the same period last year.
Marsh & Parsons, the business’s flagship London brand, grew its revenues by 11% to £17.1m, and its operating profits by 47%, to stand at £2.2m, up from £1.5m last year,
However LSL – parent company of brands including Your Move, Reeds Rains and Marsh & Parsons – repeated an earlier warning on the outlook for the rest of this year.
It said: “Whilst it is difficult to accurately predict market transactions and consumer confidence for the remainder of calendar year 2016, as reported in the Group’s recent pre-interim results trading update, LSL does not expect market conditions to improve sufficiently to meet previous financial expectations for the full year.”
Its shares have fallen 15.9% so far this year in the first six months of the year and its share price ended this week at 240p on Friday morning giving it a p/e ratio of 7.75, down from 10.47 in May.
Winkworth doesn’t report its interim results until September.
Its shares are down 24.5% at 110.5p and its p/e ratio is 9.28, down from 11.1 in May.
Foxtons’ half-year profits were down more than 42%. Pre-tax profits of £10.5m fell from £18.1m for the same period last year.
Adjusted earnings before costs (EBITDA) were hit, down from £20.5m last year to £13.1m.
Group revenue was also down in the six months to June 30, at £68.8m, compared with £71.1m last year.
Without a surge in property sales in March ahead of the introduction of the Stamp Duty surcharge, the results would have been worse. However, the crash in sales during the second quarter of this year was marked – sales revenue in that quarter was £11.4m, down from £18.2m in the same quarter of last year.
Its share price has dropped 39.9% so far this year to 112p. It is on a p/e of 11.08, down from 12.55 in May.
Savills is due to report next week. Its share price is down 22.4% to 688p so far this year and is currently on a p/e ratio of 14.82, down from 16.43 in May.
Its last update in May said the 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.
Martin & Co
Martin & Co reports its interim results in September.
Its shares are down 15% so far this year to 134p on a p/e of 14.21, down from 17.38 earlier this year.
Countrywide shares are down 39.28% so far this year at 242.5 and its p/e ratio has gone from 18.79 to 10.09.
Pre-tax profits at Countrywide tumbled 25% in the first half of this year.
Countrywide chief executive Alison Platt also warned that a period of uncertainty post-Brexit will “inevitably impact the level of transactional activity in the second half of the year and, although it is too early to quantify accurately, we will not meet last year’s results at the EBITDA level.
“Notwithstanding this, and following the significant investment we made in the business in the second half of 2015, we continue to make real progress in executing our strategy.”
Countrywide said that while operating profits were up 75% from £16.1m to £28.3m, adjusted profit before taxation was down from £28.9m in the first half of last year to £21.8m in the first half of this year.
Adjusted EBITDA was down 8% from £41m to £37.8m
Total revenue rose 9%, from £338.5m last year to £370.2m in the six months to the end of June.
Franchise chain Belvoir reports in September. Its share price has actually bucked the trend among traditional agents and has increased 16.25% so far this year to 134p. It is currently on a p/e ratio of 21.55, up from 19.64.
No healthcheck of listed agents would be complete without a look at Purplebricks.
It reported losses of £11.9m on revenues of £18.6illion for the year ending April 30, 2016. It doesn’t currently have an accepted p/e as it made a loss in its results. It is forecasting a p/e ratio of 35.8 in April 2018, according to the Motley Fool website.
Its shares have risen 42% so far this year to 137p,