REA Group Limited (ASX: REA) released its 3Q18 results last week with 19% year on year 3Q18 revenue growth, and 19% EBITDA growth, which was better than forecasts. The share price has reacted favourably and has risen 17% year to date. UBS has increased FY18 earnings per share by 2% and FY19 by 1%. UBS sees positives earnings outcomes from the launch of new agent branding products, and financial impact of HomeTrack, a provider of property data services to the financial sector
UBS has a price target of $80, so at the current price of $89.9 and forward price-earnings-ratio (PER) of 43x REA Group is looking expensive.
The nearest competitor of REA Group is Domain Holdings Australia Ltd (ASX: DHG), which is trading on a forward PER of 43x. While, Carsales.Com Ltd (ASX: CAR), in the same sector, is trading on a PER of 23x compared to the Software and Services Industry median PER of 28.5x.
