Angi Inc: A $595-Billion Market Opportunity for This $13 Stock?

An Internet Stock Most People Likely Haven’t Considered

For the most part, home services is an industry that’s yet to go digital. When you need roof shingles replaced, for instance, you simply call the roof guy that your neighbor recommended and ask for a quote.

That said, the home services market certainly has the potential to move online. In fact, one company has already been pioneering this transition: Angi Inc (NASDAQ:ANGI).

The company’s history can be traced all the way back to the creation of Angie’s List Inc. in 1995, which ran an online directory that allowed users to read and publish crowd-sourced reviews of local businesses and contractors. A merger between Angie’s List and HomeAdvisor in 2017 created ANGI Homeservices Inc. Then, in March 2021, the company changed its name to Angi Inc.

Today, Angi operates two brands in North America: “HomeAdvisor” and “Handy.” These two online marketplaces offer more than 500 tasks—such as plumbing, roofing, and landscaping—with more than 200 of them offering a fixed-price solution. There are more than 190,000 transacting service professionals using Angi’s marketplace. (Source: “Angi HomeServices: August 2020,” Angi Inc, last accessed July 2, 2021.)

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Other than its Marketplace segment, Angi operates a lead-generating business, which is reported in its Advertising & Other segment. This segment offers free resources for customers to research highly rated service professionals. There are more than 10 million verified customer reviews on the platform, and the advertising service professionals’ monthly retention rate is more than 95%.

Angi Inc has expanded its presence in Europe, too. It has the No. 1 brands in its sector in Germany (“MyHammer”), Netherlands (“Werkspot”), and France (“Travaux”). The company has the No. 2 brand in its sector in the U.K. (“MyBuilder”).

ANGI stock went public in November 2011. The following chart shows how it has performed since then.

Angi Inc (NASDAQ:ANGI) Stock Chart

Chart courtesy of StockCharts.com

Considering that ANGI stock has had a choppy ride in recent years—a period when many Internet companies saw their share prices shoot through the roof—one might think that its business must be sluggish. But that’s not really the case.

In 2020, the company generated $1.5 billion of revenue, marking an 11% increase from 2019. Notably, its pre-priced revenue totaled $162.2 million for the year. (Source: “Angi Reports Q4 2020 – Q4 Revenue Increases 12% to $359 Million,” Angi Inc, February 3, 2021.)

Angi also generated $188.4 million of operating cash flow and $135.9 million of free cash flow in 2020.

In the first quarter of 2021, Angi’s revenue grew by another 13% year-over-year to $387.0 million. There were improvements across the board: 12% growth in its Marketplace segment (including 66% growth from pre-priced offerings), seven-percent growth in Advertising & Other, and 33% growth in Europe. (Source: “Angi Inc. Reports Q1 2021 – Q1 Revenue Increases 13% to $387 Million,” Angi Inc, May 6, 2021.)

Today, Angi is the leading player in America’s home services industry, but the company still has plenty of growth potential because the market is large and fragmented, plus it has low digital penetration.

It’s estimated that there are more than 120 million occupied households in the U.S., and that a typical household requires six to eight home-service jobs per year. Moreover, there are two to three million service professionals in the U.S., but fewer than 20% of home-service projects are fulfilled online. (Source: “Angi HomeServices: August 2020,” Angi Inc, op. cit.)

In other words, Angi is facing a massive market opportunity.

How big is that market?

Well, the company recently released The Economy of Everything Home Report, which provides a comprehensive and up-to-date estimate of the total addressable market for home services in the U.S.

Factoring in three distinct markets—home improvement, home maintenance, and home emergency repair—the study estimates that there will be 728.3 million household projects in 2021, leading to a total addressable market of $595.0 billion. (Source: “The Economy of Everything Home,” Angi Inc, last accessed June 30, 2021.)

Analyst Take

Right now, the vast majority of home-service projects are fulfilled offline through word-of-mouth referrals.

But with product innovation, service-professional transition, and more millennial home ownership, the industry has the potential for further online migration to companies like Angi Inc.

When that happens, I wouldn’t be surprised to see ANGI stock—which trades at $13.52 apiece at the moment—command a much higher share price.