An analyst on shares website Motley Fool says Purplebricks is not only in surprisingly strong financial health, but is actually outperforming some longer established bricks-and-mortar agencies.
The Motley Fool analyst in question, Karl Loomes, says his favourite metric for looking at company health is called the Altman Z-Score – a test based on five key financial ratios.
The result is then compared to the average for the sector. Loomes believes a score of 3.0 is adequate and any higher score shows the company is relatively strong.
So Loomes has calculated the Z-Score for Purplebricks and compared it to two other sector players quoted on the London Stock Exchange – Foxtons Group and Hunters Property.
The estate agency sector average of Purplebricks, Hunters and Foxtons combined, looked at across all five metrics. was 5.36.
But Purplebricks by itself (to Loomes’ own surprise, it seems) comes out at a strong 9.81.
Specifically on metric one (working capital) Purplebricks has 0.83 while the sector average is 0.32; on metric two (retained earnings) Purplebricks flunks with a negative score of -0.17 while the sector normal is 0.22.
On earnings before interest and taxes – this is metric three – Purplebricks also flunks, with -0.15 against the sector average of -0.06. But on metric four (the market value of equity) Purplebricks soars with 15.01 against the sector average of 6.92.