Homestore.com blows out the doors with another quarter of analyst-topping top- and bottom-line growth. The online real estate giant continues to show that sectors that thrive on the exchange of information have been able to strike dot-com gold. While Alan Greenspan's market-friendly interest rates have definitely helped the housing market, Homestore is poised to grow with or without the sector's blessing.
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There's a hot listing on the market right now and it reads, "Great property for sale. Lots of potential. Room for expansion." Yes, I'm talking about leading online real estate operator Homestore.com (Nasdaq: HOMS). And no, I'm not holding out for a 6% commission. The company behind the popular Realtor.com site reported revenues of $129.3 million for its June quarter. That's a 23% sequential improvement and well above the $72.4 million in top-line results from the year-ago period. More critical to profit-hungry investors, the company reported pro-forma profits of $0.13 a share, two cents ahead of expectations. As our own Paul Larson noted in the latest issue of Internet Report, "the emergence of the online real estate sector has greatly streamlined the process of buying and selling property." At a time when falling interest rates are lighting the fuse of a booming housing market, Homestore.com is there to provide the wide breadth of information and analytical tools for prospective buyers, sellers, and content homebodies just looking to refinance existing digs. The $2 trillion residential home and home improvement market gives Homestore.com plenty of acreage left to claim, too. Pro forma earnings have grown through four consecutive quarters and gross margins have widened to 74%. The company sees continued improvements on both fronts. Homestore, which just happens to be pitted against Monster.com parent TMP Worldwide (Nasdaq: TMPW) in this week's timely segment of Dueling Fools, generates its revenue through professional subscriptions and by advertisers looking to land site strollers eyeing big-ticket purchases. The optimistic swell finds Homestore having little choice but to lay on a new coat of even glossier paint. The company is now expecting pro forma revenue of $522 million for the full year -- higher than its earlier $500 million guidance. Tacking on the second quarter's two cents of outperformance finds Homestore upping the earnings projection ante to $0.55 a share. Building higher into next year, Homestore now expects earnings of $0.93 a share in 2002 on revenue of $685 million. While a lot appears to be riding on cheap borrowing rates and a desire for filling out more change of address forms, keep in mind that the company can still grow even in a stagnant real estate market. As new realtors continue to sign on and more sponsors look to milk Homestore's captively indecisive audience, the company is poised to keep growing its top and bottom lines. One brick at a time. Rick Aristotle Munarriz remembers his first set of Lincoln Logs quite fondly. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy.
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