The Domain Holdings Australia Ltd (ASX: DHG) share price has slumped 14.9% lower in 2020 but I think there’s a lot to like about the ASX media share.
What does Domain Holdings do?
Domain is a real estate media and technology services business focused on the Aussie property market.
The group generates significant earnings from its data services and website, domain.com.au. That includes listing fees for Australians looking to list their homes on the group’s flagship website.
Anyone who has even casually looked at buying or renting a home recently has likely looked at Domain. I think that brand strength combined with its position in real estate media and technology makes the Domain share price rather hard to value.
Why I like the Domain share price today
If we compare Domain’s 2020 performance against the S&P/ASX 200 Index (INDEXASX: XJO) then it shows Domain is lagging. The benchmark ASX 200 index has fallen 13.0% which means Domain is behind by 1.9%.
I wouldn’t put Domain in the real estate sector, but the Domain share price is certainly doing better than many Aussie real estate shares.
In terms of competitors, shares in REA Group Limited (ASX: REA) have dipped just 1% this year. That could mean Domain is a relative value buy in the current market.
I think the mix of industries is what makes Domain such an interesting company. I personally think that its 14.9% fall in 2020 may make it a decent bargain for $3.15 per share.
While there is a lot of uncertainty in the Aussie property sector right now, there is also a lot of government support. Listings have surged in the months since March which could be a good sign for Domain’s August earnings result.
Aussies tend to have an obsession with owning residential real estate. That obsession could well see prices be maintained at or near their current levels, particularly with interest rates at all-time lows.
The real test for the real estate market will come in September when government stimulus measures are wound back. That could be a big test for the Domain share price if investors get spooked by fears of a property crash.
In the meantime, the Domain share price is paying a 1.9% dividend yield but are trading at a price to earnings ratio of 48.2 times. That to me says despite its possible relative value it may be pricey compared to long-run ASX averages.
Personally, I do like the look of the Domain share price as a long-term income share. In my view, I think the short to medium term positives outweigh some of the potential headwinds in the long-run.
Nevertheless, I think I’ll be waiting until the group’s August earnings result rather than rolling the dice in the current market.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended oOh!Media Ltd and REA Group Limited. We Fools may not 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. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.