As the population booms, particularly in urban areas, the demand for residential, commercial, and industrial spaces grows. This expansion fuels both new construction and the development of existing properties. Thus, the Real Estate market is projected to grow at 4.8% CAGR by 2033.
Moreover, rental properties accounted for over 54.5% of the market share in 2024, reflecting the demand for flexible accommodation. Also, technological advancements are reshaping the real estate market. AI, IoT, and big data analytics improve efficiency, safety, and profitability by enhancing asset management and enabling predictive maintenance, which extends building lifespans and lowers operational costs.
Against this backdrop, let’s compare two real estate stocks, Redfin Corporation (RDFN) and Colliers International Group Inc. (CIGI) to determine which is a better AI stock to own.
The Case for Redfin Corporation Stock
With a $1.53 billion market cap, Redfin Corporation (RDFN) operates as a residential real estate brokerage company in the United States and Canada. The company operates an online real estate marketplace and provides real estate services, including assisting individuals in the purchase or sell of home.
RDFN’s stock has gained 114.5% over the past three months to close the last trading session at $12.55.
Its trailing-12-month CAPEX/Sales and trailing-12-month CFO of 1.25% and 13.95 million are 54.7% and 94.1% lower than the industry averages of 2.77% and 235.62 million, respectively.
In the fiscal second quarter that ended June 30, 2024, RDFN’s revenue stood at $295.20 million. Moreover, its net loss increased 1.5% year-over-year to $27.88 million, and net loss per share stood at $0.23.
Analysts expect RDFN’s revenue for the third quarter (ended September 2024) to increase 4.4% year-over-year to $280.72 million. However, the company’s loss per share for the same quarter is expected to grow 19.2% year-over-year to $0.20.
RDFN’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an F grade for Stability and a D for Value. Within the Real Estate Services industry, RDFN is ranked #39 out of 46 stocks.
In addition to the POWR Ratings I’ve just highlighted, you can see RDFN’s ratings for Growth, Momentum, Quality, and Sentiment here.
The Case for Colliers International Group Inc. Stock
Valued at $7.81 billion by market cap, Colliers International Group Inc. (CIGI) provides commercial real estate professional and investment management services to corporate and institutional clients in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company is headquartered in Toronto, Canada.
CIGI’s stock has gained 42% over the past three months to close the last trading session at $152.08.
Its trailing-12-month asset turnover ratio and trailing-12-month cash per share of 0.81x and 3.23 are 54.7% and 515.4% higher than the industry averages of 0.13x and 235.62 million, respectively.
For the second quarter that ended June 30, 2024, CIGI’s revenues increased 5.7% year-over-year to $1.14 billion. Its adjusted EBITDA grew 5.8% year-over-year to $155.60 billion. Its adjusted EPS increased 3.8% year-over-year to $1.36.
Street expects CIGI’s revenue for the third quarter ended September 2024 to increase 11.4% year-over-year to $1.18 billion. Its EPS is expected to increase 30% year-over-year to $1.55. Moreover, the company has surpassed revenue estimates in three of the trailing four quarters.
CIGI’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CIGI has an A grade for Growth and a B for Stability. It is ranked #5 in the same industry.
Click here for the additional POWR Ratings for CIGI (Value, Quality, Sentiment, and Momentum).
Redfin (RDFN) vs. Colliers International (CIGI): Which Real Estate Stock is a Better Buy as Earnings Approach?
The growth of real estate services industry is driven by rising demand for property management, investment advisory, and brokerage due to increasing urbanization and commercial expansion. Additionally, technological advancements streamline operations, improving efficiency and client engagement.
Leading real estate companies, such as RDFN and CIGI, stand to capitalize on bright industry growth prospects. However, CIGI’s higher profitability and promising near-term outlook favor it as the better real estate stock pick.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Real Estate Services industry here.
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CIGI shares were unchanged in premarket trading Wednesday. Year-to-date, CIGI has gained 20.37%, versus a 20.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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