The 14.4% earnings yield of real estate services company Realogy Holdings Corp. (RLGY, Financial) has attracted my attention.
The company's yield is more than double the spot rate of 10-year high-quality market (HQM) corporate bonds. The corporate bonds are securities representing the corporate loan issued by triple-A, double-A and single-A rated companies.
The compelling earnings yield is the result of a low share price of $20.6 at market close on Thursday. For the 52 weeks through Sept. 20, the stock has fallen 40% and is now trading below the 200-, 100- and 50-day simple moving average lines. The market capitalization is $2.6 billion.
The stock price is currently just a few cents off the 52-week low of $19.57 and 70% below the 52-week high of $35.
The price-book ratio is 1.02 versus an industry median of 1.03, and the price-sales ratio is 0.43 versus an industry median of 2.69.
The majority of analysts give the stock a buy rating. The average target price of $28.43 is predicting a nearly 40% upside over the next 52 weeks.
Realogy also has a forward dividend yield of 1.75%, which is on par with the current dividend yield of the S&P 500 index.
The company is distributing a cash quarterly dividend of 9 cents per share. The dispersion of free cash flow to shareholders started in August 2016.
GuruFocus rated the company's financial strength 4 out of 10. Concerning profitability and growth, Realogy Holdings is in line with its industry.
The company closed fiscal 2017 with $6.1 billion in revenue, an operating income of $517 million and a net income of $431 million. As of June 30, total assets are valued at about $7.5 billion and total liabilities are valued at $5.05 billion. The total stockholders' equity is worth $2.44 billion.
Effective before the open of trading on Sept. 20, Realogy Holdings replaced Education Realty Trust Inc. (EDR, Financial) in the S&P MidCap 400 Index.
The S&P MidCap 400 Index belongs to the S&P Dow Jones Indices. The index is used as a barometer for the U.S. mid-cap equities sector and is one of the most widely followed mid-cap indexes.
The company is reporting 124.02 million shares outstanding, of which 98.89% is held by institutions and 1.35% is held by insiders.
With 12.26% of outstanding shares, EdgePoint Investment Group Inc. is the largest shareholder of the company, followed by Okumus Fund Management Ltd. with 7.58%, Mason Hawkins with 6.2% and TREMBLANT CAPITAL GROUP with 4.44%.
Disclosure: I have no positions in any stocks mentioned in this article.
