LPS Brasil - Consultoria de Imóveis S.A. provides real estate brokerage services in Brazil. It engages in the provision of brokerage services for the sale and purchase of third-party and land subdivision properties, as well as consulting, technical real estate advisory, franchising, correspondent bank, and other related activities. The company was founded in 1935 and is headquartered in São Paulo, Brazil.

Brazil

LPS Brasil - Consultoria de Imóveis S.A.

Real Estate

The company pays dividends from time to time. It has paid dividends in less than half the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

LPSB3.SA reported revenue of BRL 193mn in the last 12 months, up 6% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 21% from FY23 to BRL 0.14. Market expects EPS to reach BRL 0.70 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 10ppts and its growth decelerated by 11ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 36.5% in the last 12 months, up from 21.9% in FY23. 

Historically, LPSB3.SA has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 9.6%, down from 12.9% in FY23. 

LPS Brasil - Consultoria de Imóveis S.A. reported a return on equity (RoE) of 8.5% in the last 12 months, down from 11.7% in FY23. The market consensus projects an RoE of 15.3% in FY24, this time above its peers. 

Another important profitability metric, return on assets (RoA), amounted to 4.6% in the last 12 months, a decrease from 5.9% in FY23. The market analysts predict that RoA will be 8.1% in FY24, again stronger than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 5.6%, above the peers. The consensus estimate for FY24 for RoCE is 9.5%, again ahead of the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.6 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

LPSB3.SA has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is usually stable and is unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, strong debt servicing capacity, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, and excessive margin volatility.

In highly turbulent market conditions, LPSB3.SA is volatile. In other words, the stock will fall much more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be large. 

In normal market circumstances, LPSB3.SA is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from large to immense. We would also like to highlight the immense intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is undervalued relative to its peers. Specifically, the stock is fairly valued on P/E, undervalued on EV/EBITDA, reasonably priced on P/FCF. 

LPS Brasil - Consultoria de Imóveis S.A.

R$ 1.59

3

LPS Brasil - Consultoria de Imóveis S.A.

R$ 1.59

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

R$ 1.59

About

About

About

About