Offerpad Solutions Inc. (NYSE: OPAD)

Sector: Real Estate Industry: Real Estate Services CIK: 0001825024
Market Cap 21.79 Mn
P/B 0.55
P/E -0.40
P/S 0.03
ROIC (Qtr) -18.79
Div Yield % 0.00
Rev 1y % (Qtr) -36.23
Total Debt (Qtr) 156.80 Mn
Debt/Equity (Qtr) 3.93
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About

Offerpad Solutions Inc., commonly referred to as Offerpad, is a technology-driven real estate company operating in the United States, with the ticker symbol OPAD. Offerpad's mission is to provide a seamless and efficient home buying and selling experience through technology-enabled solutions. The company operates in various metropolitan markets, covering 15 states, 25 metropolitan areas, and over 1,700 cities and towns. Offerpad's primary goal is to become a one-stop solution for real estate transactions, providing a range of services tailored to...

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Investment thesis

Bull case

  • Operating cash flow of 49.54M provides strong 12.08x coverage of stock compensation 4.10M, indicating sustainable incentive practices.
  • Robust free cash flow of 44.36M exceeds capital expenditure of 5.19M by 8.55x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 223.46M provides 4.47x coverage of working capital 50.02M, indicating strong operational backing.
  • Tangible assets of 223.46M provide robust 19.42x coverage of other current liabilities 11.51M, indicating strong asset backing.
  • Operating cash flow of 49.54M fully covers other non-current liabilities 13.39M by 3.70x, showing strong long-term stability.

Bear case

  • Operating cash flow of 49.54M barely covers its investment activities of (5.19M), with a coverage ratio of -9.55, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 33.64M against inventory of 162.37M, the 0.21 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Investment activities of (5.19M) provide weak support for R&D spending of 3.63M, which is -1.43x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating earnings of (39.59M) show weak coverage of depreciation charges of 859000, with a -46.08 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 44.36M represents just -0.47x of debt issuance (95.06M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Real Estate Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CBRE Cbre Group, Inc. 42.12 Bn 36.40 1.04 9.99 Bn
2 BEKE KE Holdings Inc. 19.37 Bn 39.77 1.33 2.96 Bn
3 CSGP Costar Group, Inc. 18.57 Bn 914.80 6.08 1.18 Bn
4 JLL Jones Lang Lasalle Inc 13.60 Bn 21.53 0.54 3.48 Bn
5 FSV FirstService Corp 7.02 Bn 48.37 1.28 1.38 Bn
6 CIGI Colliers International Group Inc. 5.59 Bn 54.27 1.01 2.29 Bn
7 COMP Compass, Inc. 5.18 Bn -91.82 0.78 0.48 Bn
8 OPEN Opendoor Technologies Inc. 3.12 Bn -9.84 0.66 1.79 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.94 1.18
EV to Cash from Ops. EV/CFO 4.26 -6.57
EV to Debt EV to Debt 1.35 5.19
EV to EBIT EV/EBIT -5.33 4.86
EV to EBITDA EV/EBITDA -5.43 13.56
EV to Free Cash Flow [EV/FCF] EV/FCF 4.76 -11.14
EV to Market Cap EV to Market Cap 9.68 7.70
EV to Revenue EV/Rev 0.34 3.49
Price to Book Value [P/B] P/B 0.55 1.76
Price to Earnings [P/E] P/E -0.40 40.59
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.36
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -7.05
Dividend per Basic Share Div per Share (Qtr) 0.00 0.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 0.46
Interest Coverage Int. cover (Qtr) -2.65 -2.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -319.66 -12,527.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -42.42 24.62
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.26
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 1.55 10.86
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 9.57 33.08
EBIT Growth (1y) % EBIT 1y % (Qtr) 2.10 19.37
EBT Growth (1y) % EBT 1y % (Qtr) 9.45 28.48
EPS Growth (1y) % EPS 1y % (Qtr) 10.60 29.29
FCF Growth (1y) % FCF 1y % (Qtr) 253.15 67.74
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -43.01 33.25
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 2.81 1.44
Cash Payout Ratio Cash Payout (Qtr) 0.00 -0.01
Cash Ratio Cash Ratio (Qtr) 0.22 1.45
Current Ratio Curr Ratio (Qtr) 1.32 2.16
Debt to Equity Ratio Debt/Equity (Qtr) 3.93 -0.07
Interest Cover Ratio Int Coverage (Qtr) -2.65 -2.20
Times Interest Earned Times Interest Earned (Qtr) -2.65 -2.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -6.20 -120.34
EBIT Margin % EBIT Margin % (Qtr) -6.30 -135.17
EBT Margin % EBT Margin % (Qtr) -8.68 -142.98
Gross Margin % Gross Margin % (Qtr) 7.10 32.99
Net Profit Margin % Net Margin % (Qtr) -8.70 -138.31