A Fresh Look at Zillow (ZG) Valuation After Recent Share Price Movements

Zillow Group (ZG) is catching investor attention after recent movements in its share price, even though there has not been a single headline-grabbing event driving the change. Sometimes, it is these quieter stretches that leave investors wondering if there is useful information hiding in plain sight. With growth in the housing and real estate tech space still a major conversation, shifts in sentiment can speak volumes about how the market is weighing Zillow Group’s future prospects. Looking at the bigger picture, Zillow Group’s stock has delivered strong gains of 22% over the past year, showing clear momentum despite a few setbacks in the past few months. The past quarter alone saw a 13% rise, helping recover ground from earlier declines, while its three-year return stands out at 170%. Still, there has been some volatility in the month, and investors are weighing how much of Zillow’s growth story is already reflected in the share price. So after this recent rally, are Zillow shares trading at a bargain, or is the market already pricing in a future step up in growth?

Most Popular Narrative: 12.8% Undervalued

According to the most popular narrative, Zillow Group is currently trading below its estimated fair value, suggesting meaningful upside based on optimistic forecasts for revenue growth, segment expansion, and profitability gains.

The accelerated digital transformation of real estate, combined with Zillow's leading traffic, engagement, and product innovation such as AI-powered tools, integrated communication platforms (Follow Up Boss), and immersive experiences (SkyTour), positions the company to expand market share and drive higher user conversion rates. This is likely to result in above-industry revenue growth and higher monetization per transaction.

Want to know what underpins this ambitious call? Find out how Zillow’s playbook for growth relies on digital reinvention and bold projections about future profitability and margins. The narrative hinges on market-disrupting technology, a leap in transaction value, and powerful financial assumptions hidden just below the headlines.

Result: Fair Value of $88.46 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistently low home affordability or intensified competition from alternative real estate platforms could quickly undermine Zillow's bullish growth story.

Find out about the key risks to this Zillow Group narrative.

Another View: Market-Based Valuation Challenges the Optimism

While discounted cash flow points to Zillow Group being undervalued, a look at its price-to-sales ratio tells a different story. This suggests shares are trading at a premium to the industry. Which narrative best fits the real risks and rewards ahead?

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Zillow Group to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Zillow Group Narrative

If you see the story differently or want fresh insights, take the data into your own hands. Your analysis can reveal another perspective in minutes. Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Zillow Group.

Looking for More Investment Ideas?

Sharpen your edge and seize fresh opportunities. Don't let untapped market leaders or tomorrow’s winners slip by when smart investment screens are only a click away.

• Uncover high-upside names with the potential to skyrocket by reviewing penny stocks with strong financials, which are leading the charge in innovation and bold growth.
• Secure consistent payouts and financial stability as you browse dividend stocks with yields > 3%, offering yields above 3% and attractive fundamentals.
• Get ahead of market shifts in breakthrough sectors with AI penny stocks, building the technology behind tomorrow’s biggest growth stories.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com