This FTSE 100 growth stock just keeps growing

Move right (LSE:RMV) may be the best stock in the FTSE 100. The company is doing very well and looks set to generate cash for investors in the long run.

Rightmove’s share price fell 30% in 2022. But the underlying business looks to be going from strength to strength.

As a result, I think the company’s stock is better than it was at the start of 2022. The current price looks like a buying opportunity to me.

earnings

Mr Market was not impressed with Rightmove’s earnings last week. The stock fell slightly on Friday while the FTSE 100 moved higher.

Despite rising inflation and a slowing UK housing market, the company reported £333m (compared to £305m in 2021). Earnings per share were 23.4p (up from 21.3p).

The amount of time users spend on the platform remains above pre-pandemic levels. And the company returned £198m to shareholders through dividends and share buybacks.

Rightmove is currently in the process of changing its CEO, with Johan Svanström replacing Peter Brooks-Johnson. This is probably the biggest risk with stocks right now.

A change in leadership can disrupt a business and this is something investors should be aware of. But the new CEO inherited the business in a strong position.

Rightmove has no debt, low operating costs, and a competitive position that is hard to disrupt. All this makes copmany strong enough to take over.

Evaluation

An earnings yield of 10% may not seem like much for a stock trading at a price-to-earnings (P/E) ratio of 25. But companies have at least three ways to boost earnings per share.

The first is by increasing prices for advertisers. Rightmove’s user base makes it a must-have platform for housebuilders and estate agents, giving them pricing power.

In the report, the company announced that the average revenue per advertiser was up 11% from the previous year. Even so, the number of advertisers remains unchanged.

The second is by moving into different markets. Rightmove has developed and developed a platform for commercial properties and listings overseas.

Both of these are good in 2022. The commercial property platform grew by 19% and the overseas listing platform could grow by 21%.

The third is by buying back shares. Buybacks lower the number of shares, meaning that each remaining share has a greater claim on the company’s overall earnings.

In 2022, Rightmove’s buyback reduced the number of outstanding shares from 859m to 835m. And management expressed its commitment to buy back in the future.

Stocks to buy

Rightmove’s P/E ratio can make the stock look expensive. But I have some of the best growth prospects in FTSE 100 stocks.

Combined with the intrinsic strength of the business, this makes the stock attractive. That’s why I think it’s a buy at today’s prices.