) is set to report first quarter 2014 results on May 7. Last
quarter, it posted a 220.0% positive surprise. We note that
Zillow has outperformed the Zacks Consensus Estimate in the
preceding four quarters with an average positive surprise of
Let's see how things are shaping up for this announcement.
Growth Factors this Past Quarter
Zillow offers mobile and web solutions that enable users to
find important information about homes. We believe that the
strong growth in traffic, frequent new product launches and
growing Premier Agent business are the positives for the company
Moreover, new product launches, which include the
newly-designed Zillow Real Estate App for
) iPhone and iPad and the Zillow Digs app for iPhone are
positives. Additionally, continuing investments in marketing
activities will boost traffic going forward. However, these
investments will hurt profitability in the near term.
Moreover, fierce competition from the likes of
) are the major headwinds going forward.
Our proven model does not conclusively show that Zillow is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
The Most Accurate estimate coincides with the Zacks
Consensus Estimate of a loss of 22 cents. Hence, the difference
is of 0.0%.
Zillow's Zacks Rank #3 (Hold) when combined with a 0.00% ESP
makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
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