The Zacks Consensus Estimates for
CoStar Group, Inc.
) have fallen meaningfully lower for both 2013 and 2014 after the
company reported its Q4 results on February 27. It is a Zacks
Rank #5 (Strong Sell).
In addition to declining earnings estimates, shares still
trade at a premium valuation at 59x forward earnings. This
doesn't bode well for shares over the next several weeks.
CoStar Group provides information, analytics and marketing
services for the commercial real estate market.
CoStar reported fourth quarter results on February 27.
Adjusted earnings per share came in at 36 cents, beating the
Zacks Consensus Estimate by a penny. Revenue rose 51% to $100.1
million, but this was driven in large part by an acquisition.
Despite the small Q4 earnings beat, the Zacks Consensus
Estimates for both 2013 and 2014 fell meaningfully lower, sending
the stock to a Zacks Rank #5 (Strong Sell). The 2013 Zacks
Consensus Estimate is now $1.71, down from $1.80 sixty days ago.
And the 2014 consensus is now $2.28, down from $2.57 over the
same period. You can see this sharp decline in the company's
'Price & Consensus' chart:
Despite the negative earnings momentum, shares of CoStar still
trade at a frothy 59x 12-month forward earnings, which is a
significant premium to the industry median of 17x. Its price to
cash flow ratio of 68 is also well above the industry median of
CoStar Group also carries a long-term 'Underperform' Zacks
The Bottom Line
With negative earnings momentum and premium valuation,
investors may want to consider avoiding CoStar Group for now.
However, there are other stocks within the IT Services industry
that investors might want to check out.
), for instance, carries a Zacks Rank of 1 (Strong Buy), and
) carries a Zacks Rank of 2 (Buy).
Todd Bunton is the Growth & Income Stock Strategist for
and Editor of the
Income Plus Investor service
***We are reissuing this article to correct a mistake. The
original article, issued Tuesday, March 19, 2013, should no
longer be relied upon.***
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