When investors think of investing in real estate stocks, they look to real estate investment trusts (REITs). Not many think of the digital and analytics side of real estate or investing in a company like CoStar Group (NASDAQ: CSGP). Investors seeking to diversify their participation in the real estate market outside of REITs may look to CoStar Group, an industry leader for real estate information and online marketplaces. But before you buy, take a look at where the Company stands today and where it could be going.
Online analytics and industry leader
CoStar Group has been a leader in real estate data for commercial real estate (CRE) since 1987. Over the years it has achieved incredible growth, now operating as a global company with a number of national brands under its belt, including CoStar, Lands of America, Ten-X Commercial, STR, LoopNet, and Apartments.com. Their online marketplaces are some of the most popular platforms for buying, selling, and leasing commercial space, land, and rental apartments in addition to providing data and analytics about the CRE market as a whole.
Strong growth despite challenging economic times
There's no denying the company's strong track record, especially after its Q2 2020 earnings release showing a 16% increase in revenue when compared to the same quarter of the previous year. While Q2 of 2020 was a challenging time for many REITs, CoStar increased earnings before interest, tax, depreciation, and amortization (EBITDA) by 17%; reached an all time high for sales records of $35 million; and raised $2.7 billion dollars in the equity and debt markets while adding Ten-X to its digital portfolio. Its online marketplaces and platforms saw 62 million unique visitors over Q2 2020, a 13% increase from Q1 2020. However, net income saw a decrease from $1.98 per diluted share in Q1 2020 to $1.60 per diluted share. This decrease is largely from the $190 million acquisition of Ten-X this past quarter.
CoStar Group's portfolio allows it to achieve diversification throughout the real estate industry, having marketplaces specializing in nearly every sector, including distressed sales and auctions, virtual tours, and digital marketplaces. This has proved helpful as the interest and need for online research, leasing, and sales move online during the global pandemic. Their companies, and subsidiaries there of, like Realla, have all seen large upticks in visitors or listings since the beginning of the year, further supporting the fact that companies like CoStar Group are proving to be a valuable resource in the real estate world, making it a compelling buy for investors looking for a growth opportunity.