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Real Matters 2Q Earnings And Revenue Beat Estimates; Street Says Buy

Real Matters (REAL) provides services for the mortgage lending and insurance industries. The company reported better-than-expected results in its second quarter.

Real Matters’ U.S. consolidated revenues came in at $128.8 million in the quarter ended March 31, an increase of 17.5% from $109.6 million in the second quarter of 2020. Net income was $11.7 million ($0.13 per share), down from $18.7 million ($0.21 per share) in 2Q 2020.

Including Canadian operations, the consolidated net revenue increased 29.8% to $46.7 million. Net income was $0.15 per share in the first quarter, up from $0.13 per share a year ago and significantly higher than the analyst estimate of ($0.49) per share.

Adjusted EBITDA increased 30.2% to $19.0 million from 2Q 2020, principally driven by higher volumes and margin expansion in the U.S. Title segment.

Real Matters CEO Brian Lang said, “The U.S. mortgage market continued to demonstrate strong year-over-year growth in the second quarter, and both our U.S. businesses outperformed the market from market share growth and new client additions. Our centralized U.S. Title revenues were up 78.4% compared with an estimated 71.1% increase in the refinance origination market, while U.S. Appraisal origination revenues were up 12.0% compared with an estimated 10.7% increase in the addressable market.”

“Looking ahead, our principal focus continues to be market share growth and adding new clients. Given our performance track record and the breadth of our U.S. lender client base, we are confident in our ability to continue driving organic growth over the long-term with a view of achieving our Fiscal 2025 targets,” added Lang.

In the most recent quarter, the company launched its first Tier 1 lender in U.S. Title and three other new lenders. (See Real Matters stock analysis on TipRanks.)

Earlier in April, Raymond James analyst Steven Li maintained a Buy rating on the stock but lowered its price target to C$25.00 from C$28.00 (36.2% upside potential).

Overall, the consensus on the Street is that REAL is a Strong Buy based on 3 Buys and 1 Hold. The average analyst price target of C$25.00 implies an upside potential of about 36.2% to current levels. Shares have jumped by about 30% over the past month.

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