Is Domain Holdings Australia Ltd entering the buy zone?

Has the market re-valued Domain Holdings Australia Ltd (ASX:DHG) now it's flying free? 

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's been an action-packed first few months on the Australian Securities Exchange for Domain Holdings Australia Ltd (ASX: DHG) which commenced trading in November 2017 at $3.80 with a market capitalisation of close to $2.2 billion. 

Domain Holdings is a real estate classified and service business that broke away from multi-platform media group Fairfax Media Limited (ASX: FXJ). 

Before the spin off, US investment company TPG Capital and US private equity company Hellman and Friedman made takeover bids for Fairfax to include the Domain business. The bids were at $2.76 billion and $2.78 billion respectively, but both retreated after viewing the books. 

TPG reportedly walked away because of too much hype about Domain's future value and its movements as a spin-off have so far been conservative.

Domain has kept its head well above an analyst price forecast of $2.60 last November; a low it hasn't come close to since the shock resignation of its high-profile CEO in January, which saw a slump down to $2.75. 

Domain opened today just above $3, a slip of almost 2% as the S&P/ASX 200 followed Wall Street deep into the red after the Dow Jones fell more points in a single session than it has since the GFC. 

Before the spin off last year analysts valued Domain's operations as worth $2.3 billion, with significant growth potential, something the property listings business might be able to tap into with the freedom the demerger has given it to focus wholly on its own needs. 

Even Domain's current share price of upwards of $3 implies an equity value greater than analysts' forecasts and with a global search for a new CEO underway, shareholders may feel another surge of confidence in the near future as fresh management takes the helm. 

If the trajectory of multinational digital advertising business REA Group Limited (ASX: REA) is anything to go by in terms of a comparable peer, Domain might be in the running for real success in the boom or bust property portal arena. 

REA Group's share price is up above $70 with a market cap sitting pretty at $9.69 billion and favourable analyst forecasts for the future. 

All eyes are on Domain as it works to prove itself and emulate its REA Group peer, steering clear of the issues that have plagued McGrath Ltd (ASX: MEA) the best it can. 

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »