The Domain Holdings Australia Ltd (ASX: DHG) share price has continued climbing, up another 3% today on no company news. How high can it go?
About Domain
Domain is the business behind one of Australia’s largest property portals, Domain.com.au, which allows property sellers to try to advertise to as many potential buyers as possible. Some of the other real estate websites it operates include Allhomes.com.au and Commercialrealestate.com.au.
Positive Signs
The Domain share price has been an underperformer since listing back in November 2017, and the share price today is still lower than the original listing price. The last six months, however, have seen the share price grow more than 33% and reach its highest price since October 2018.
So, what’s pushing the company higher?
Domain’s 1H19 results, released in February, really put a fire under the share price despite the company reporting EBIT declining 12%, net profit declining 14.2% and EPS declining 15.1%. Revenue for the period increased by 0.3%.
Despite these results, Domain showed strong growth in key areas such as commercial revenue growth (up 20%) and a 95% increase in Domain Insure quote-to-sales conversions.
More recently, the share price has likely been boosted by a whole host of positive news events for the property market.
The Coalition election win crushed the chances of negative gearing reform. The chances of the RBA cutting rates appear to be increasing which has some investors hopeful that mortgage rates will fall further. Combine this with APRA’s news that they are considering cutting the minimum serviceability rates and things are starting to look more positive for property and companies like Domain or REA Group Ltd (ASX: REA).
There are certainly negative arguments as well, such as increasing levels of household debt and the chance that banks won’t pass on rate cuts to consumers, but the positives seem to be weighing more heavily on the Domain share price.
Is It A Buy?
Domain depends on a strong property market and there are a lot of factors right now that could influence the market in either direction. For this one, I’d have to say it’s not within my circle of competence and I’d be more comfortable investing in one of the companies mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
