| Name of Company | Country of Origin/ Exchange Traded | Sector | Stock Price | ||||||||
| RIGHTMOVE PLC | UK/ LSE |
Technology – Online Media – Internet Content & Information | GBP4.80 | ||||||||
| @ 27 Sep 2018 | |||||||||||
| COMPANY PROFILE | Rightmove PLC operates in the UK residential and commercial property industry connecting people to properties. Its activities include resale and lettings property advertising services & advertising services to new home developers and housing associations.
Rightmove PLC is a U.K. property portal that provides online property search platforms. The company’s customers primarily include agents, buyers, renters, and new home developers. Rightmove provides users with tools such as the house price index, which tracks house prices and analyzes price trends in the U.K. house market, and a mortgage calculator, which estimates mortgages and monthly repayments. The company’s segments include agency, new homes, and other. The agency segment provides resale and lettings property advertising services. The new homes segment provides property advertising services to new home developers. The other segment includes overseas, commercial property, and nonproperty advertising services. |
||||||||||
| Stock Code | RMV | ||||||||||
| Stock Valuation Below | |||||||||||
| Price to Cash Flow is an alternative method to value shares. This is because accounting profits can be subject to manipulation. Therefore, some investors prefer to value a company based on cash flows generated by the operating activities of the company. It also acts as a reality check to valuation measures such as Price to Earnings and Price to Sales. If a company generates high profits and sales but not operating cash flows, it could be heading for trouble because it is cash that pays the operating expenses. However, the Price to Cash Flow ratio of most firms are volatile and should not be used in isolation to determine the valuation of the stock. | |||||||||||
| At the price of GBP4.80 as at 27 Sep 2018, Rightmove Plc is trading at a Price to Cash Flow Ratio of 27.3 times last 12 months cash flow. This is a 1.6% discount to current fair Price to Cash Flow Ratio of 27.7 times. | |||||||||||
| Is the stock undervalued? One should not just look at one indicator to determine the fair value of a stock. | |||||||||||
| ProThinker believes in using a combination of valuation methods to decide whether a stock is over or undervalued? The five ratios we use are Price to Earnings, Price to Sales, Price to Cash Flow, Price to Book and Dividend Yield. We use multiple methods to value a stock because each has its benefits as well as shortcomings. Price to Earnings and Price to Cash Flow Ratios relate stock price to profitability but are meaningless when the comany has negative earnings or cash flows. Price to Sales Ratio is more stable because sales are never negative. However, this does not tell us whether the company is able to sell profitably. Price to Book Ratio gives us an indication as to how much we are paying for the company’s assets but it is not directly related to the company’s profitability. Dividend Yield cannot be used for companies that are paying little to no dividends. | |||||||||||
| While it is important to value stocks based on multiple valuation methods, this often leads to differing views on valuation. One indicator may suggest that a stock is overvalued while another suggest that it is undervalued. This does not help an investor who needs to make a definite decision whether to buy, hold or sell the stock. That is why we advocate the use of a Composite Valuation Indicator, which is derived from the best combination of the five indicators above. A Composite Valuation Indicator will give you ONE conclusion on whether a stock is under or over valued. | |||||||||||
| To find out more about our valuation methodology, click here. | |||||||||||
| Source of Data: Company description, historical financial statements data and price data are from gurufocus.com or moneycontrol.com. Estimates are from marketscreener.com – Thomson Reuters. | |||||||||||
| Disclaimer: This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither ProThinker nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of ProThinker. Copyright(c) 2018. All rights reserved. | |||||||||||