On Mar 18, 2013, shares of
) hit a 52-week high of $55.09. The company reported
fourth-quarter results with a positive earnings surprise of
133.33%. Zillow delivered positive earnings surprise in all 4
quarters of 2012 with an average beat of 411.11%.
On Feb 13, 2013, Zillow reported its fourth-quarter net earnings
of 2 cents, which exceeded the Zacks Consensus Estimate of a loss
of 6 cents. Results were down 33.3% year over year from 3 cents
earned in the year-ago quarter.
During the fourth quarter Zillow's top line grew 73% to $34.3
million on a year-over-year basis. It surpassed the Zacks
Consensus Estimate by 10.6%. Results were driven by improvement
in marketplace revenue and display revenue.
Zillow has been continuously working toward improving its revenue
structure through increasing its clientele. In order to achieve
this goal, the company is pursuing strategic acquisitions and is
offering new and better products to its customers.
In Oct 2012, Zillow introduced a new website, Zillow Rentals,
to enhance the rental business on mobile and Web. Again, in Feb
2013, it launched Zillow Digs- an online service in home
remodeling, which marked an expansion in its existing lines of
In 2012, Zillow acquired four companies- RentJuice, HotPads,
Mortech Inc. and Buyfolio- to boost its organic growth story.
Further, in Feb 2013, the company declared that Zillow Real
Estate Network will be partnering HGTV to provide all real estate
listings for HGTV's Front Door, the cable channel's home-related
media content website. Zillow Premier Agent website which is
expected to come into force in the second quarter of 2013 will
also be benefited from the partnership.
During its fourth-quarter earnings release, Zillow guided its
2013 revenue to be in the range of $165-$170 million. The
liaisons, launch of advanced services and acquisitions are
expected to help Zillow achieve its expectation and improve its
top line going forward.
However, valuation looks stretched for Zillow. The shares are
trading at a considerable premium to the peer group average on a
forward price-to-earnings basis and at a 36.6% premium to the
peer group average on a price-to-book basis.
The return on equity is 3.3% above the peer group average.
Nevertheless, the 1-year return from the stock is 63.63%, much
above NASDAQ's return of 5.96%.
Going forward, Zillow's focus on maintaining aggressive expansion
of its mobile and desktop user base, enhancing its Premier Agent
business as well as improving mortgages, rentals and home
improvement to cement its position in emerging markets are
expected to be beneficial.
We believe that the strong emphasis on revenue improvement
will bolster future earnings. The overall long-term expected
earnings growth rate for this stock is 30.0%.
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Zillow currently carries a Zacks Rank #3 (Hold). Among others
from the industry,
China Distance Education
) carry a favorable Zacks Rank #2 (Buy) and are worth noting.