In the volatile world of stocks, eXp World Holdings Inc (EXPI, Financial) has experienced a significant daily loss of 8.52%, compounded by a 3-month decline of 11.95%. With an Earnings Per Share (EPS) sitting at a modest $0.03, investors are keen to understand whether these figures signal an investment opportunity. This analysis aims to shed light on whether eXp World Holdings (EXPI) is modestly undervalued and if it presents a compelling buy for the value investor. Read on for an in-depth valuation analysis of the company.
Company Introduction
eXp World Holdings Inc operates as a cloud-based residential real estate company, revolutionizing the industry with its innovative technology platform. This platform enhances business efficiency while reducing the overhead costs associated with traditional office spaces. With a diverse portfolio that spans real estate brokerage, technology services, and mortgage brokerage services, eXp World Holdings has established a strong presence not only in the United States and Canada but also in markets such as the UK, Australia, and India. The current stock price of $15.13 is set against the backdrop of the GF Value of $20.1, suggesting an intriguing disparity that warrants a closer look.
Summarize GF Value
The GF Value is an exclusive measure that pinpoints the intrinsic value of a stock like eXp World Holdings (EXPI, Financial), factoring in historical trading multiples, the company's past performance, and future business prospects. When the stock price hovers above the GF Value Line, it may be overvalued, hinting at weaker future returns. Conversely, a price below the GF Value Line could indicate an undervalued stock with potential for higher returns. Currently, with a market cap of $2.30 billion, eXp World Holdings appears modestly undervalued, which could suggest a favorable long-term investment return relative to its business growth.
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Financial Strength
It is crucial to assess a company's financial strength before investing. eXp World Holdings boasts a robust cash-to-debt ratio of 8581.5, outperforming 94.24% of its peers in the Real Estate industry. This strength is further reinforced by its financial strength rating of 8 out of 10, suggesting a resilient financial position.
Profitability and Growth
Profitability is a key indicator of a company's investment risk. eXp World Holdings has maintained profitability over the past decade, with a revenue of $4.20 billion and an Earnings Per Share (EPS) of $0.03 in the last twelve months. However, its operating margin of 0.01% is less impressive, ranking lower than 75.73% of the companies in the Real Estate industry. The company's profitability rank is 4 out of 10, reflecting some challenges in this area.
Regarding growth, eXp World Holdings' 3-year average annual revenue growth rate of 55.9% outshines 93.9% of its industry counterparts. However, its EBITDA growth rate has not been as remarkable.
ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can reveal its value creation efficiency. eXp World Holdings' ROIC of 0.45, when measured against a WACC of 17.27, suggests the company may not be generating sufficient returns on its investments.
Conclusion
The analysis suggests that eXp World Holdings (EXPI, Financial) is modestly undervalued, with robust financial health yet modest profitability. Its growth, though impressive in terms of revenue, is not fully reflected in its EBITDA. For a comprehensive understanding of eXp World Holdings' financials, interested parties are encouraged to review its 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.
