Why Rightmove plc, Foxtons Group PLC & Quintain Estates and Development plc Are Surging Today?

If you are looking for a nice growth and yield story, Rightmove (LSE: RMV) is one business you ought to keep on the radar over the next few quarters. Foxtons (LSE: FOXT) isn’t too bad either, but I’d need more evidence to commit to it in spite of a 9% rise in its stock price today. Elsewhere, you’d be very lucky if you had recently invested in Quintain Estates. 

A Strong Performance For Rightmove

The residential property website announced today its half-year results for the six months ended 30 June, which made for a good reading.

Revenues are up 16% to £93m, while operating income (+18%), earnings per share (+18%) and dividends (+23%) are growing at a faster pace. Its online offering is gathering pace, too, with advertising revenues growing in the double-digit territory. The business boasts a strong balance sheet.

“Rightmove is becoming even more popular with the British home moving public,” Nick McKittrick, its chief executive, pointed out today.

The shares of Rightmove have risen more than 3% today, and are up 47% this year. It’s not time to sell yet: analysts believe there remains a 10% to 20% upside from its current level of 3,500p a share, in spite of trading multiples of 30x and 27x based on net earnings for 2015 and 2016, respectively. Are analysts right? 

Theirs could be a right call if Rightmove maintains a steep growth rate, which I think is likely. 

Foxtons: Unappealing Update Boosted By Outlook and Divvy 

The half-year results of the London estate agent aren’t particularly attractive. 

Revenues and pre-tax income are down 2.3% and 21.4%, respectively, compared to the first half of 2014, while other financial metrics aren’t particularly appealing, although the dividend is up 5% — this is behind today’s 9% rise in its stock price along with a “positive outlook for H2 with sales stock levels up 12.1% and a sales pipeline of almost £1bn, 12.5% ahead of last year,” as Foxtons said. 

Cash balances are virtually unchanged on a comparable basis, but free cash flow is down 10%. 

At 18x and 16x forward net earnings for 2015 and 2016, respectively, you’d be buying a stock that is up 40% so far this year, but is still down 10% over the last 12 months. Based on fundamentals, I’d wait at least until the next trading update before considering Foxtons as a valid equity investment for my portfolio. 

Quintain Estates: Done Deal? 

“The boards of directors of Bailey Acquisitions Limited (Bidco) and Quintain Estates and Development PLC (Quintain) are pleased to announce that they have reached agreement on the terms of a recommended cash offer for Quintain by Bidco,” the companies announced today. 

Under the terms of the offer, Quintain shareholders will receive 131p in cash for each Quintain share, which values the entire share capital of Quintain at approximately £700m on a fully diluted basis. 

The shares trade at 132.2p and are up 25% at the time of writing. While there remains a possibility that other bidders would sneak in, you’d do well to take profit, I’d say.