Is the SEEK share price a buy on updated FY19 guidance?

Is the SEEK Limited (ASX:SEK) share price worth buying on its updated FY19 guidance?

| 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

Is it worth buying any shares at the current SEEK Limited (ASX: SEK) share price?

The Australian employment giant made its presentation at the Macquarie Group Ltd (ASX: MQG) conference today and gave trading and guidance update.

Aside from re-iterating its strengths and strong track record of growth, it was the guidance that may get investors moving tomorrow.

The company reminded investors that it has market leadership in 18 countries with exposure to around 2.9 billion people and approximately 26% of the global GDP.

However, SEEK's continuous investing in long-term ideas is causing short-term profit growth to be subdued, but the company is also seeing slowing market conditions.

SEEK said that it continues to see a slowdown in macro conditions in a number of its key markets which has resulted in "an easing of ad volume and billing growth." The guidance which I am going to refer to below assumes no further material deterioration in any of its key markets.

The company said because of the new education deals, and momentum in its existing investments where it is investing more heavily, the FY19 losses from 'Early Stage Ventures' (ESV) has increased above the previous guidance range of $40 million to $45 million.

SEEK reaffirmed revenue growth in the range of 16% to 20%, earnings before interest, tax, depreciation and amortisation (EBITDA) growth will be in the range of 5% to 8%, and reported net profit after tax (NPAT) will now be "moderately" below FY18's NPAT. SEEK again attributed this result to the ESV investments and transaction funding costs.

Foolish takeaway

I'm unsure whether the fact that SEEK is investing so much is a good thing or perhaps a bad thing. It might say SEEK needs these other businesses to generate growth, or you could say that all of the investments are just a bonus on top of SEEK's existing businesses and the company can expand into other areas.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK 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 Scott Phillips.

More on Share Market News

Delighted adult man, working on a company slogan, on his laptop.
Broker Notes

Broker tips 20% upside for these ASX utilities shares

Bell Potter sees upside in these two shares.

Read more »

A beautiful woman with brown hair and wearing bright red lipstick looks shocked as she holds her hand to her cheek in response to the crumbling Adore Beauty share price today
Broker Notes

3 ASX consumer sector shares to avoid in July: expert

If you're looking to buy ASX consumer shares in July, read on.

Read more »

A little girl with red hair runs excitedly with a rocket strapped to her back, trying to launch.
Broker Notes

106% upside? Expert says this ASX All Ords small cap mining stock could explode

Big upside potential.

Read more »

ETF spelt out
Share Market News

New ASX ETF set to launch from Global X

The ETF provider announced a new ETF 

Read more »

A man in a business suit scratches his head looking at a graph that started high then dips, then starts to go up again like a rollercoaster.
Broker Notes

Buy the dip on these 2 ASX 200 shares: experts

Experts say these 2 ASX 200 shares are a buying opportunity today.

Read more »

A man looking at his laptop and thinking.
Share Market News

5 things to watch on the ASX 200 on Friday

Will the market end the week on a high? Let's find out.

Read more »

Happy miner giving ok sign in front of a mine.
Opinions

Which ASX 200 stock offers 'material upside' amid continuing uncertainty over US tariffs?

Blackwattle Investment has identified one ASX 200 large-cap stock that is thriving on the uncertainty.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Bapcor, Boss Energy, Macquarie, and Novonix shares are falling today

These shares are having a tough session on Thursday. But why?

Read more »