Realogy IPO lit up market but is it overly leveraged? - Barrons

Sun Oct 14, 2012 10:58am EDT

Oct 14 (Reuters) - Realogy's IPO last week was one of the biggest smashes of the year. Only Facebook Inc and Santander Mexico Financial Group were bigger.

The IPO, with shares soaring 22 percent during the company's market debut, was a bet on the housing rebound as well as a victory for private equity firm Apollo Global Management LLC, which took Realogy private at the peak of the housing boom in 2007.

But shares in the Parsippany, New Jersey-based company, which owns real estate brokerages such as Coldwell Banker and Century 21, "look overpriced," according to a story on Sunday in Barron's.

As noted in Barron's, the company is valued at $4.4 billion and carries $4.5 billion in debt.

"Put a still-generous multiple of 11 on next year's projected cash flow and Realogy's stock is valued at around $27," said Barrons. "That's 20 percent below current levels."