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RMAX – Markets expect Uniform ROA to compress significantly, and management is concerned about their forecast, future growth, agent quality, Motto Mortgage, competition, and booj platform

August 15, 2019

  • RE/MAX Holdings, Inc. (RMAX:USA) currently trades at the low end of historical levels relative to UAFRS-based (Uniform) Earnings with a 3.5x Uniform P/E, implying bearish expectations for the firm. Additionally, management is concerned about their forecast, future growth, agent quality, Motto Mortgage, competition, and booj platform
  • Valens’ qualitative analysis of the firm’s Q2 2019 earnings call highlights that management is confident that there will be fewer employed agents in the near future. Additionally, management may be concerned about Motto Mortgage’s growth rates, earnings, Amazon partnership, and competition. Moreover, management appears concerned by the housing market’s poor performance in Q2, especially in the month of June and what that may imply going forward
  • Management may be concerned about recent inventory increases being representative of future trends. Additionally, management may be overstating the significance international branches have on growth. Also, management may be concerned about future expansion into Canada. Moreover, management may be overstating how the booj platform, which effectively replacing third party tech venders, will cut down on expenses. Additionally, management may be concerned about what the development team has been able to produce. Also, management may be concerned by the quality of RE/MAX University. Finally, RE/MAX’s management may be overstating how the availability of resale homes is representative of potential growth.

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