The Real Brokerage has gotten torched over the last six months - since January 2026, its stock price has dropped 53.9% to $1.71 per share. This might have investors contemplating their next move.
Is there a buying opportunity in The Real Brokerage, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Do We Think The Real Brokerage Will Underperform?
Even with the cheaper entry price, we’re sitting this one out for now. Here are three reasons why REAX doesn’t excite us, plus one stock we’d rather own.
1. Breakeven Operating Margin Raises Questions
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
The Real Brokerage’s operating margin has generally stayed the same over the last 12 months. The company broke even over the last two years, inadequate for a consumer discretionary business. Its large expense base and inefficient cost structure were the main culprits behind this performance.
2. EPS Barely Improving
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Although The Real Brokerage’s full-year earnings are still negative, it reduced its losses and improved its EPS by 8.5% annually over the last four years. The next few quarters will be critical for assessing its long-term profitability.
3. Mediocre Free Cash Flow Margin Limits Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
The Real Brokerage has shown poor cash profitability relative to peers over the last two years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 3.3%, below what we’d expect for a consumer discretionary business.
Final Judgment
We cheer for all companies serving everyday consumers, but in the case of The Real Brokerage, we’ll be cheering from the sidelines. Following the recent decline, the stock trades at 3.5× forward EV-to-EBITDA (or $1.71 per share). This valuation multiple is fair, but we don’t have much confidence in the company. There are superior stocks to buy right now. We’d recommend looking at a top digital advertising platform riding the creator economy.
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