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Bull of the Day: Realogy (RLGY)

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Realogy Holdings Corp. (RLGY - Free Report) is at the front lines of the hot housing market. This Zacks Rank #1 (Strong Buy) is expected to see double digit earnings growth this year and next.

Realogy is one of America's largest real estate services companies. It offers brokerage services, relocation and title and settlement businesses as well as a mortgage joint venture.

Its brands include Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, Coldwell Banker Commercial, Corcoran, ERA and Sotheby's International Realty.

Big Beat in the Third Quarter

On Oct 29, Realogy reported its third quarter results and blew by the Zacks Consensus by $0.19. Earnings were $1.36 versus the consensus of $1.17.

Revenue jumped 20% to $1.9 billion.

Title and mortgage were a big boost in the quarter, generating approximately $95 million in third quarter operating EBITDA.

The housing market was strong in the quarter and that led to a 28% jump in combined closed transaction volume. The transaction volume continued to improve throughout the quarter and also continued to be strong into October.

It generated free cash flow from continuing operations of $344 million, up from $116 million a year ago.

As a result, the company was able to reduce net debt by $276 million versus a year ago.

It also was able to grow brokerage agents 2% year-over-year and continued to improve retention.

Full Year Estimates Rise

Given the strong quarter and the continued hot housing market nationwide, the analysts are bullish about Realogy in 2020 and 2021.

The 2020 Zacks Consensus Estimate has jumped to $1.16 from $0.36 in the last month. That is earnings growth of 13.7% from last year as the company only made $1.02 in 2019.

2021 is looking even brighter. The Zacks Consensus has surged to $1.60 from $0.84 over the prior 30 days.

That's also another 38% earnings growth.

Shares Rally But Are Still Cheap

Realogy shares got sold off in the March coronavirus sell-off but have rallied and are now up 31% year-to-date.



But shares are still cheap.

Realogy trades with a forward P/E of just 10.5.

It's competitors have also been hot this year. Redfin (RDFN - Free Report) shares are up 126% year-to-date. It's a Zacks Rank #2 (Buy).

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Realogy Holdings Corp. (RLGY) - free report >>

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