Resimac Group Limited (ASX:RMC): A Valuation Dislocation with High Earnings Potential in 2025

Resimac Group Limited (ASX:RMC) has emerged as a compelling case study in valuation dislocation, offering investors a rare blend of robust asset growth and undervalued fundamentals. Despite a mixed earnings report for FY2025—marked by a 13% rise in normalized profit after tax (NPAT) to AU$39.7 million and a 14% year-over-year increase in mortgage settlements—the stock trades at a 47.7% discount to its estimated fair value of AU$1.99, according to discounted cash flow analysis [4]. This disconnect between performance and price raises critical questions about the company’s ability to capitalize on its strategic momentum and deliver outsized returns.

Valuation Dislocation: A Tale of Two Metrics

Resimac’s P/E ratio of 12.2x lags behind both its peer average (11.7x) and the broader Australian diversified financials sector (15x) [3]. Analysts suggest this undervaluation stems from skepticism about the company’s cost efficiency, particularly following the acquisition of the Westpac consumer auto portfolio, which has inflated impairment expenses [2]. However, this pessimism overlooks the structural tailwinds driving Resimac’s business.

The company’s assets under management (AUM) surged to $15.9 billion in FY2025, a $1.8 billion increase driven by a 27% jump in asset finance AUM [1]. This growth trajectory positions Resimac to benefit from Australia’s low-interest-rate environment, which has spurred mortgage refinancing and asset financing demand. Yet, the market appears to underprice these dynamics, as evidenced by the 44.99% projected earnings per share (EPS) growth for 2025, far outpacing industry expectations [2].

Earnings Potential: A Contrarian Case for Growth

While recent analyst ratings have leaned toward downgrades—four for 2026 and one for 2027 in the past 30 days [1]—the fundamentals suggest a more optimistic outlook. Resimac’s revenue is forecast to grow at a 61% annualized rate over the next two years, a stark contrast to the 6.4% decline anticipated for its sector [1]. This divergence underscores the company’s unique positioning in a fragmented market.

The key to unlocking value lies in Resimac’s ability to scale its operations without sacrificing margins. A 21% profit margin in FY2025, though down from 24% in FY2024, reflects the drag of strategic investments rather than operational failure [1]. With AU$75 million returned to shareholders via dividends and buybacks in FY2025 [2], the company has demonstrated disciplined capital allocation—a trait that could bolster investor confidence and justify a re-rating.

Risks and Rewards

Critics will point to the recent share price volatility and analyst downgrades as red flags. However, these factors may represent a buying opportunity for long-term investors. Resimac’s fair P/E ratio is estimated at 18.4x [3], implying a 51% upside from its current 12.2x multiple. This re-rating potential is further supported by its strong balance sheet and the scalability of its asset-light business model.

In conclusion, Resimac Group’s valuation dislocation offers a compelling entry point for investors willing to look beyond short-term noise. With a clear path to earnings growth and a market that appears to underprice its strategic assets, RMC could deliver significant outperformance in the coming years.

**Source:[1] Resimac Group Ltd (ASX:RMC) Full Year 2025 Earnings Call [https://finance.yahoo.com/news/resimac-group-ltd-asx-rmc-010037408.html][2] Resimac Group Limited (RMC.AX) analyst ratings, estimates [https://sg.finance.yahoo.com/quote/RMC.AX/analysis/][3] Resimac Group (ASX:RMC) Stock Valuation, Peer ... [https://simplywall.st/stocks/au/diversified-financials/asx-rmc/resimac-group-shares/valuation][4] Unlocking Value in ASX Small-Caps: A 2025 Guide to ... [https://www.ainvest.com/news/unlocking-asx-small-caps-2025-guide-identifying-undervalued-opportunities-2509/]