There's no denying that REA is one of the highest quality businesses on the ASX so it does deserve some sort of a premium but >60x is a bit rich considering the growth.... Analysts were expecting EPS of $2.49 & they came out at $2.47 which is barely a miss maybe the fact they didnt give guidance made the market a little uneasy hence the 5% selloff today. The $2.47 earnings puts the current PE of REA on 64..... Given the earnings are expected to grow at 26% into FY 22 I dont think that PE is deserved, especially given all the uncertainty around with the Delta Variant & snap lockdowns, these lockdowns severely impact REA.

Over the last 10 years the NTM Price/Normalised Earnings ratio has averaged 32 but since 2019 the shares have seen a significant Re Rate. Although REA pretty much owns the market I do question where their next growth levers will come from, i expect the company to average closer to 10% growth over the next 5 years even after covid (hopefully) goes away and life returns to a new normal.

I would love to own REA but for me I wont be looking at it unless its under $100 which seems incredibly unlikely in this market but with 2000 stocks out there to look at there's bound to be a better opportunity.

I did look at REA when they were trading around $56 many moons ago but missed out by a few % on my buy order (I was a different type of investor back then who thought 1% mattered). Given the PE is double what it was back then I'm happy to miss this one again.

Thanks for the discussion.  I hear you PE is too high, and I would normally agree.  But I think this company is unique and I'm buying because it is:

* market leader

* highly scalable because it's tech based and not location dependent

* diversifying into mortgage lending

* taking over / replicating their model internationally

My opinion of Afterpay was that it was overvalued.  But the market paid it.  So I could be wrong on this one going back the other way?

I personally like REA better than APT, fluctuations not as unpredictable, price not that much different.  But I totally understand there are thousands of companies to choose from and this might not list in top ten of anybody's list but mine. Haha.

Disclosure Held. I listened to the call. REA delivered a pretty good set of numbers IMO, especially Australia that contiunes to disply the dominance of the biz here. i think when CEO stated that July had been impacted by lockdown , that unsettled the market, so may be 2H weighted and will comp unusual activity, Sydney and Melbourne lockdowns. the market is the market. in terms of the four growth initiaitives, my view is that it is difficult to determine success at this stage. The move on MOC and brokers in general i see as a dilution of the strong biz they run. maybe there are side benefits of owning some of the customers, but tricky biz that. US turned around and delivered a good pick up, we need to see if that is sustainable. US realestate industry is very different to OZ. Selling SE Asia into PG makes sense i think, but  REA lose control is the offset. India? well i suppose it is worth a try. dont know the success of foreigners investing in India, dont think it is very high. again see how they go. the strong cashflows of the underlying Aust biz are hopefully being fruitfuly invested in these initiatives. My valuation is $160-120 est, so at top of range. IMO one to add to if we get a market melt down at some stage.