This real estate software/analytics company is setting a pace for double-digit earnings (estimated at 24.11% annually) for the next five years.
RealPage, Inc. (RP)
From Game Changers
Note from Nancy: I’d like to welcome Hilary Kramer, editor of Game Changers and several other newsletters, to our pages. I’ve known Hilary for many years, and she is a fabulous stock picker and analyst.
After the market closed on Monday, Real Page, Inc. (RP) posted a first-quarter earnings per share (EPS) of $0.40 vs. $0.37 in the first quarter of 2018 on a 16% increase in revenues to $234.3 million. Operating income was up 20%, but EPS comparisons were hurt by a higher share count. Both EPS and revenues were in line with expectations.
Guidance was mixed, with second-quarter revenue guidance of $241.9 million to $243.9 million being $2 million short of expectations, while revenue guidance for the whole year of $982 million to $1 billion was raised by $2 million on the low end. EPS guidance for the year remains between $1.71 to $1.79. This is in line with current expectations.
The conference call was upbeat, with management very pleased with sales to new customers and client retention. Several sales initiatives are working well right now, and the company’s software remains a good value proposition as it saves property managers significant labor costs.
The stock reacted badly to the lower-than-expected revenue guidance for the first quarter on a very tough market day. However, I would not be overly concerned with the initial weak reactions to the earnings report, as the company’s growth prospects remain well defined.
Buy RP under $59.50. My target is $70.
Hilary Kramer, Game Changers, Eagle Financial Publications, https://www.hilarykramer.com/, 844-419-4548, May 17, 2019