With a recent daily loss of 11.63% and a 3-month decline of 49.27%, eXp World Holdings Inc (EXPI, Financial) has caught the attention of investors, particularly when considering its Earnings Per Share (EPS) of $0.03. This article delves into the critical question: Is the stock significantly undervalued? The following analysis aims to provide a clear valuation perspective, encouraging readers to explore the financial intricacies of eXp World Holdings Inc (EXPI).
Company Introduction
eXp World Holdings operates a cloud-based residential real estate brokerage and a technology platform business, emphasizing immersive technologies to increase business efficiency and reduce traditional office space costs. With a presence in the United States, Canada, the United Kingdom, Australia, and beyond, eXp World Holdings has diversified its operations into Real Estate Brokerage, Technology Products and Services, Title, Escrow, Settlement Services, and Mortgage Brokerage Services. When juxtaposed with its current stock price of $12 and a GF Value of $33.53, it suggests that the company may be significantly undervalued.
Summarize GF Value
The GF Value is a proprietary measure used to determine the intrinsic value of a stock. It factors in historical trading multiples, a GuruFocus adjustment for past performance and growth, and future business performance estimates. When the stock price significantly deviates from the GF Value Line, it suggests potential overvaluation or undervaluation, impacting future returns. Currently, with a market cap of $1.80 billion, eXp World Holdings (EXPI, Financial) is deemed significantly undervalued, hinting at the possibility of higher long-term returns compared to its business growth.
Financial Strength
Assessing a company's financial strength is crucial before investing. eXp World Holdings boasts a cash-to-debt ratio of 8581.5, surpassing 92.03% of its peers in the Real Estate industry. With a strong financial strength rating of 8 out of 10, the company's risk of permanent loss appears to be mitigated.
Profitability and Growth
Investing in consistently profitable companies is generally less risky. eXp World Holdings has maintained profitability over the past decade, with a revenue of $4.20 billion and an EPS of $0.03 in the last twelve months. However, its operating margin of 0.01% is lower than 75.43% of its competitors, reflecting poor profitability. The company's growth is impressive, with a 3-year average annual revenue growth rate of 55.9%, ranking above 93.92% of the Real Estate industry. Nonetheless, its EBITDA growth rate is less encouraging, positioning it below industry peers.
ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can indicate its value creation potential. eXp World Holdings' ROIC of 0.45 is significantly lower than its WACC of 19.31, suggesting challenges in generating cash flow relative to the capital invested.
Conclusion
In conclusion, eXp World Holdings (EXPI, Financial) appears to be significantly undervalued. The company exhibits strong financial health but poor profitability. Its growth outperforms a significant portion of the Real Estate industry, yet its ROIC versus WACC raises concerns. For a more detailed financial overview, interested parties can explore eXp World Holdings' 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
