September 3, 2012 / 5:51 AM / 5 years ago

MIDCAP-Australia's REA Group, Consolidated Media look expensive on valuations

REA Group Ltd and Consolidated Media Holdings look the most expensive among 55 companies in Australia’s consumer discretionary sector, data from Thomson Reuters StarMine shows.

REA Group, a real estate advertiser, and Consolidated Media Holdings, a media company, fare badly on the Relative Valuation (RV) model with a score of 11 each. The lower the score, the more expensive the stock.

The data includes firms tracked by at least three analysts.

Both firms experienced a decline in their Earnings Quality (EQ) scores after their June quarter results were reported in August. REA saw a decline of 5 points at 89 while CMH saw a sharp fall of 46 points at 39.

REA and CMH have low Value-Momentum (Val-Mo) scores of 25 and 23 respectively. CMH also has a low SmartHoldings score of 21 while REA has a score of 75.

Of the 17 analysts tracking REA, six rate it at ‘strong buy’ or ‘buy’, eight rank it at ‘hold’ while three recommend a ‘sell’ or ‘strong sell’ rating.

On the other hand, of the nine analysts tracking CMH, two rate it at ‘strong buy’ or ‘buy’ and seven rank it at ‘hold’.

REA and CMH are up 25.6 percent and 45.57 percent respectively, against a gain of 5.55 percent in the broader index.


StarMine’s Relative Valuation model combines six different ratios that measure a company’s valuation and then ranks it compared with all other stocks in the same region.

A low score on StarMine’s Earnings Quality model signals poor earnings sustainability over the next 12 months based on a company’s past operating performance.

StarMine’s Val-Mo model provides a 1-100 percentile ranking of stocks and rates companies based on a combination of value and momentum metrics.

StarMine’s SmartHoldings model is a global stock selection model that ranks stocks based on expected future increase or decrease in institutional ownership. (Reporting By Reshma Apte; Editing by Gopakumar Warrier)

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