Last Updated: 15 Sep 2024
Executive Summary
Zillow Group Inc. (Z) is a leading digital real estate company with a market capitalization of $13.83 billion. Despite a challenging operating environment, Zillow continues to demonstrate strong revenue growth, with its latest quarter showing a 13% increase year-over-year. However, the company remains unprofitable, with a trailing twelve-month EBITDA loss of $134 million. The stock price has recently traded at $59.74, below its 52-week high of $61.13.
Company Overview
Zillow operates a suite of real estate websites and mobile applications that provide users with information about homes for sale and rent, as well as tools for buying, selling, and financing properties. The company's primary revenue streams include advertising from real estate agents and brokers, as well as transaction fees from home sales and rentals.
Fundamental Analysis
Revenue: Zillow's revenue has grown steadily in recent years, reaching $2.07 billion in the latest twelve-month period. The company's focus on expanding its suite of products and services has contributed to this growth.
Profitability: Zillow remains unprofitable, with a trailing twelve-month EBITDA loss of $134 million. The company's operating expenses have outpaced revenue growth, primarily due to increased marketing and technology investments.
Valuation: Zillow's forward PE ratio of 36.76 is above the industry average, indicating that investors are pricing in future growth prospects. However, the company's high EV/EBITDA ratio of 87.3 suggests that the stock may be overvalued.
Technical Analysis
Trend: Zillow's stock price has been trending sideways in recent months, with support at around $50 and resistance at around $60.
Moving Averages: The stock's 50-day and 200-day moving averages are both below the current price, indicating a neutral to slightly bullish trend.
Indicators: The relative strength index (RSI) and moving average convergence divergence (MACD) indicators are both in neutral territory, suggesting that the stock is not overbought or oversold.
Short Term Outlook
In the short term, Zillow's stock price is likely to continue trading within its current range. The company's upcoming earnings report will be a key catalyst for the stock, as investors will be looking for signs of improved profitability.
Long Term Outlook
Zillow's long-term growth prospects remain positive. The company's strong brand recognition, extensive product offerings, and focus on innovation should drive continued revenue growth. However, the company's profitability remains a concern, and investors should monitor Zillow's progress in this area.
Analyst Recommendations
Analysts are generally bullish on Zillow's long-term prospects. Of the 21 analysts covering the stock, 12 have a buy rating, 9 have a hold rating, and none have a sell rating. The average analyst target price is $57.88, implying a potential upside of 3.2% from the current price.
