Sector Insights | 16th October 2018
A shares analyst has strongly tipped both Rightmove and OnTheMarket.
Rupert Hargreaves, a regular writer for Motley Fool, says that Rightmove’s “operating profit margins are through the roof”.
Over the last five years, it has made an average margin of 72%, making it one of the most profitable companies on the London stock exchange.
Shareholders, he says, have “benefited tremendously from the company’s outrageous profitability”.
Someone who invested £1,000 ten years ago would find it worth £20,000 now.
He says he expects Rightmove’s market-smashing performance to continue.
Of OnTheMarket, Hargreaves says that while it is not yet profitable, he is optimistic that the business can grab a large chunk of
the market.
He says: “With traffic growing exponentially, I’m highly optimistic about the prospects for OnTheMarket.
“According to current forecasts, profitability is still some way away, but analysts believe revenue will more than double by 2020.
“Losses are expected to grow as the company reinvests earnings back into the business, which I think is a sensible course of action for this growth stock.
“As the company uses the same fee-based business model as Rightmove, I am confident that when it finally switches out of growth mode, OnTheMarket will be a highly profitable enterprise.
“It might be sensible to take advantage of this opportunity before the rest of the market realises the opportunity here.”
On Friday, OnTheMarket’s share price went down 2.3% to finish at 145p. Rightmove’s shares went down 2.85% to finish at 452.5p.
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