Why Realogy Shares Vaulted Higher

Why Realogy Shares Vaulted Higher

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Realogy , a real estate and relocation services company within the U.S., advanced as much as 10% after reporting better-than-expected third-quarter earnings results.

So what: For the quarter, Realogy's revenue soared 21.2% to $1.55 billion, helped by a 29% surge in year-over-year homesale transaction volume, as profit per share climbed to an adjusted $1.03 as compared to a loss per share of $4.24 last year. Wall Street, on the other hand, was expecting Realogy to report just $0.87 in EPS on $1.48 billion in revenue. Looking ahead, the company guided full-year homesale transaction volume growth to a range of 17%-19% over last year and guided adjusted-EBITDA to a similar growth range of 16%-19%.

Now what: On one hand, this is a stunning report, given just how much concern there was surrounding real estate activity in the third quarter, with interest rates bouncing off their May lows. With NRT, the operator of its brokerage offices, noting that its average home-sale transaction price was a clean 87% higher than the national average during the quarter, it also speaks to the affluent customer base Realogy's business targets, which is less susceptible to economic swings. However, there's also concern that higher lending rates could eventually stymie refinancing activity and negatively affect Realogy's top and bottom-lines. Because of that higher rate potential, I don't personally see a lot of room left for upside from here.

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The article Why Realogy Shares Vaulted Higher originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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