Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Realogy Holdings Plunged Today

By Bram Berkowitz - Feb 23, 2021 at 4:24PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings in the fourth quarter of 2020 missed expectations, while full-year earnings just beat. However, investors may be worried that the mortgage market has peaked.

What happened

Shares of the real estate brokerage and title and escrow company Realogy Holdings (RLGY -1.99%) plunged by more than 15% today after the company reported earnings results for the fourth quarter and full year of 2020.

So what

In the fourth quarter of 2020, Realogy, which franchises brokerage brands such as Century 21, Coldwell Banker, and Sotheby's International Realty, reported $0.16 earnings per share (EPS) on revenue of roughly $1.9 billion. Both numbers are up significantly from the fourth quarter of 2019.

Fourth-quarter operating earnings before interest, taxes, depreciation, and amortization (EBITDA) of $206 million increased by $80 million year over year. On an adjusted basis, Realogy's fourth-quarter EPS of $0.68 came up short of analysts' expectations by $0.03.

Picture of a home.

Image source: Getty Images.

On the year, Realogy reported a loss of $3.13 per share, down from a loss of $1.65 per share in 2019. Total revenue on the year and operating EBITDA grew by 6% and 23% from 2019, respectively. The widening loss in 2020 includes noncash impairment charges of $682 million largely attributable to the COVID-19 crisis.

On an adjusted basis, EPS of $2.01 beat analysts' expectations for the year by a penny.

Now what

Although revenue and EBITDA grew in the quarter and for the full year, many investors are worried the mortgage market, which Realogy's business is heavily dependent on, may have peaked in 2020.

Worries of inflation and sooner-than-expected rate hikes may be spooking investors, as both refinancing and purchase mortgage activity dries up in a rising-rate environment.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Realogy Holdings Corp. Stock Quote
Realogy Holdings Corp.
$11.34 (-1.99%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.