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RealPage: Data Analytics for Property Management

03/12/2019 5:00 am EST

Focus: REAL ESTATE

Hilary Kramer

Editor, GameChanger Stocks

Property management can be a complex business as owners need to deal with multiple locations, different laws and regulations, various property types and mobile renters who often lead to vacancies, explains Hilary Kramer, growth stock expert and editor of GameChangers.

This is where RealPage (RP) comes into play. The company is a leading global provider of software and data analytics to the real estate industry with 12,500 world-wide clients, primarily property managers in the rental real estate industry.

RP’s analytics allow the client to improve revenues and yields by enhancing marketing effectiveness, pricing and occupancy rates and the collection of revenues and other fees.

Property managers can also reduce costs by streamlining and centralizing management functions such as document generation, procurement and accounting.

One newer area of growth for RealPage has been tenant services, including speeding up the process behind lease applications and service requests as well as increasing the ease in which lessees can contact property management.

The company has realized very good growth in recent years, with revenues increasing from $405 million in 2014 to $869 million last year and acquisitions aiding the top line the past two years. Earnings per share (EPS) grew from $0.39 to $1.51 over the same period, with both organic and acquisition-led growth adding scale and improved profit margins.

For 2019, the company is looking for revenues to continue to grow, with the $990 million midpoint of the company’s revenue guidance range of $980 million to $1 billion representing a growth of 14%, with roughly 10% coming from organic growth.

EPS growth should continue to outpace revenue growth, with the $1.75 midpoint of the company’s $1.71 to $1.79 guidance range representing a 16% increase. Given the company’s past margin performance, I believe the EPS guidance could be on the conservative side.

With growth likely to continue over the long-term, RealPage will continue to see its premium multiply. Buy the stock when it trades below $59.50. My $70 target is based on the company selling at 33X 2020 EPS estimates of $2.10.

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