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Realogy Holdings Rebounds Strongly

Jun. 08, 2020 7:46 AM ETAnywhere Real Estate Inc. (HOUS)


  • The company was cruising in Q1 with double digit volume growth but then the pandemic struck taking volumes deeply negative.
  • The company reacted swiftly with additional cost cutting and an accelerated shift in technology uses like virtual visits.
  • While the shares are cheap and the market could very well recover rapidly, we won't buy until we see a turn-around in cash flow.

The Armageddon that investors in Realogy Holdings (RLGY) expected doesn't seem to be materializing in quite the destructive way investors positioned themselves for in March.

However, the stock has already rebounded strongly, albeit from extremely depressed levels. Market stabilization and recovery and quick company reaction is likely to provide some further mileage to the stock, but the biggest gains are behind us.

Astute swing traders could have made an absolute killing trading Realogy Holdings, the shares absolutely collapsed in March and have already more than tripled since although still quite some way from their February heights:

Needless to say, the impact of the COVID-19 pandemic has been less than initially feared. The pandemic is a most unwelcome interlude as the company was actually on a pretty decent run, as we reported in our January 31 article.

The problems it was struggling (and seemingly in the process of overcoming) back then, like competition for agents, seem to belong to an altogether other area already.

ChartData by YCharts

Don't be scared by the above crash in net income, these are GAAP figures driven by a $441M (non-cash) impairment charge and a $38M net increase in interest expense due to the mark-to-market adjustments on interest rate swaps.

COVID-19 impact and reaction

The company was basically cruising when COVID struck:

  • Franchise and brokerage volume was growing 12% in the first half of March, then declined 10% in the second half.
  • Closed transaction volume down 20%-25% in April, with significant geographical variation (NY City, California and New Jersey the strongest hit).
  • Open transaction volume down 40% in franchise and 50% down in brokerage, with the same geographical variation.
  • Change in mix towards the lower end with substantially fewer $1M+ houses going under contract in April.
  • The decline has hit a peak mid-April, there is some improvement
ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

This article was written by

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Finding the next Roku while navigating the high-risk, high reward landscape

I'm a retired academic with three decades of experience in the financial markets.

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Finding the next Roku while navigating the high-risk, high reward landscape.

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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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