Amidst a challenging market, eXp World Holdings Inc (EXPI, Financial) has experienced a notable 5.4% daily loss and a significant 3-month decline of 49.38%. However, its Earnings Per Share (EPS) (EPS) stands at a modest $0.03. This raises a critical question for investors: is eXp World Holdings significantly undervalued at its current market price? This article delves into the valuation analysis of eXp World Holdings, offering readers a detailed perspective on the stock's true market value.
Company Introduction
eXp World Holdings operates as a cloud-based residential real estate company, revolutionizing the industry with its innovative technology platform. This platform enhances business efficiency while reducing traditional office space costs. With diverse operations spanning the United States, Canada, the United Kingdom, Australia, South Africa, France, India, Portugal, and Mexico, eXp World Holdings has established a strong presence in the global market. The company's valuation is particularly intriguing when comparing its current stock price of $11.56 to the GuruFocus Fair Value (GF Value) of $19.99, suggesting a potential undervaluation.
Summarize GF Value
The GF Value is an exclusive metric that determines the intrinsic value of a stock, taking into account historical trading multiples, GuruFocus' adjustment factor for past performance and growth, and future business performance predictions. If a stock's price significantly deviates from the GF Value Line—either above or below—it suggests potential overvaluation or undervaluation, respectively. eXp World Holdings (EXPI, Financial) currently appears significantly undervalued, which could indicate a promising opportunity for higher future returns.
Financial Strength
Investors must consider a company's financial strength to mitigate the risk of permanent capital loss. eXp World Holdings boasts a robust cash-to-debt ratio of 8581.5, ranking it above 92.04% of its peers in the Real Estate industry. With an overall financial strength score of 8 out of 10, eXp World Holdings demonstrates a solid financial foundation.
Profitability and Growth
Profitability is a key indicator of a company's investment potential. eXp World Holdings has maintained profitability for 4 out of the past 10 years, with a revenue of $4.20 billion and an EPS of $0.03 over the last twelve months. However, its operating margin of 0.01% does not compare favorably within the Real Estate sector. The company's profitability rank is 4 out of 10, reflecting some challenges in this area.
Growth is another vital factor in company valuation. eXp World Holdings has achieved an impressive average annual revenue growth of 55.9%, outperforming 93.91% of companies in the Real Estate industry. Yet, its 3-year average EBITDA growth rate stands at 0%, which is less promising.
ROIC vs WACC
An effective way to assess a company's profitability is by comparing its Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC). eXp World Holdings' ROIC of 0.45 is significantly lower than its WACC of 19.46, indicating that it may not be creating sufficient value for shareholders relative to the cost of its capital.
Conclusion
Considering the financial strength, growth prospects, and current market valuation, eXp World Holdings (EXPI, Financial) stock appears to be significantly undervalued. While the company's profitability may pose some concerns, its robust financial condition and impressive growth trajectory provide a compelling case for potential investors. To delve deeper into eXp World Holdings' financials, interested parties can explore its 30-Year Financials here.
To discover high-quality companies that may deliver above-average returns, please visit the GuruFocus High Quality Low Capex Screener.
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.
