Zillow (ZG) Hits 52-Week High, Can the Run Continue?
Have you been paying attention to shares of Zillow Group (ZG)? Shares have been on the move with the stock up 11% over the past month. The stock hit a new 52-week high of $69.01 in the previous session. Zillow Group has gained 42.8% since the start of the year compared to the 14.9% move for the Zacks Computer and Technology sector and the 15.2% return for the Zacks Internet - Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 7, 2020, Zillow reported EPS of $-0.25 versus consensus estimate of $-0.35.
For the current fiscal year, Zillow is expected to post earnings of $-1.14 per share on $3.51 billion in revenues. This represents a -111.11% change in EPS on a 28.11% change in revenues. For the next fiscal year, the company is expected to earn $-0.88 per share on $5.35 billion in revenues. This represents a year-over-year change of 22.63% and 52.21%, respectively.
Zillow may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Zillow has a Value Score of D. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Zillow currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Zillow passes the test. Thus, it seems as though Zillow shares could still be poised for more gains ahead.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.