RMAX

We rate RE/MAX Holdings, Inc. (RMAX) as Avoid with a composite score of 32.7/100 at a current price of $6.43. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in value (55th percentile) and investment (38th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (14th percentile) and quality (24th percentile) tempers our overall conviction. We assign a No Moat rating (26/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

RE/MAX Holdings, Inc. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 32.7/100 places it at rank #4314 in our full 7,333-stock universe. At $189M in market capitalization, RE/MAX Holdings, Inc. is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -7% combined with momentum at the 14th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of 18% (+0.7pp vs sector) and net margins of 4.9%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $6.43, RE/MAX Holdings, Inc. is trading near fair value based on current fundamentals. Our value factor score of 55/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 9.4x (a 21% discount to the sector median of 11.9x), EV/EBITDA of 2.6x (discounted to peers), P/B of 0.4x, P/S of 0.5x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to RE/MAX Holdings, Inc.. Key risk factors include below-average price stability (26th percentile), weak quality scores (24th percentile), the combination of leverage (99% D/E) and thin margins (4.9% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: below-average price stability (26th percentile); weak quality scores (24th percentile); the combination of leverage (99% D/E) and thin margins (4.9% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 26th percentile and quality factor at the 24th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate RE/MAX Holdings, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-90.9%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — RE/MAX Holdings, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, RE/MAX Holdings, Inc. receives a Avoid rating with a composite score of 32.7/100 (rank #4314 of 7,333). Our quantitative framework assigns a No Moat (26/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 32/100.

Our analysis does not support a constructive view on RE/MAX Holdings, Inc. at this time. The combination of limited competitive advantages, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.