Could Recent Share Weakness Offer Opportunity in Zillow Stock for 2025?

• If you are wondering whether Zillow Group at around $68 a share is a hidden opportunity or just another housing hype story, you are not alone. This breakdown is designed to help you decide with confidence.
• Despite being down 6.1% over the last week, 2.9% over the past month, and 3.0% year to date, the stock is still up 111.6% over three years. That makes its recent 7.9% one year pullback and 52.8% five year slide especially interesting for value focused investors.
• Recent moves in the share price have been shaped by shifting expectations around the US housing market, including tight inventory, higher for longer mortgage rates, and growing adoption of digital platforms for home search and rentals. Zillow has responded to these trends with continued investment in its housing marketplace, rental tools, and agent services, positioning itself as a central data and transaction hub in residential real estate.
• On our valuation checks, Zillow Group currently scores 3/6 for being undervalued. Next we will unpack what different valuation methods say about that number, before finishing with a more holistic way to think about what the stock is really worth.

Find out why Zillow Group's -7.9% return over the last year is lagging behind its peers.

Approach 1: Zillow Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a business is worth today by projecting the cash it can generate in the future and discounting those cash flows back to the present.

For Zillow Group, the latest twelve month Free Cash Flow is about $190.4 million. Analysts and model projections see this rising significantly, with forecast Free Cash Flow reaching roughly $1.99 billion by 2035. Within the next decade, key waypoints include around $591.6 million projected for 2026 and $1.17 billion by 2029, with later years extrapolated by Simply Wall St beyond the initial analyst horizon.

When these projected cash flows are discounted back using a 2 Stage Free Cash Flow to Equity model, the resulting intrinsic value comes out to roughly $102.06 per share. Compared with the current share price near $68, the DCF suggests Zillow Group is trading at about a 33.4% discount to its estimated intrinsic value.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Zillow Group is undervalued by 33.4%. Track this in your watchlist or portfolio, or discover 914 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Zillow Group.

Approach 2: Zillow Group Price vs Sales

For companies where profits are still modest relative to their growth ambitions, Price to Sales is often a better yardstick than Price to Earnings because it focuses on the scale and quality of revenue today, rather than volatile or still developing earnings.

In general, faster growth and lower perceived risk justify a higher sales multiple, while slower growth or higher uncertainty usually pull a fair Price to Sales ratio lower. Zillow Group currently trades at about 6.63x sales, which is well above both the Real Estate industry average of roughly 2.03x and the peer group average of around 3.04x. On the surface, that makes the stock look expensive versus the wider sector.

Simply Wall St’s Fair Ratio, however, goes a step further by estimating what a reasonable multiple should be once you adjust for Zillow’s specific growth outlook, margins, risk profile, industry positioning, and market cap. For Zillow, this Fair Ratio sits at about 4.74x sales, comfortably below the current 6.63x. That gap suggests the market is pricing in more optimism than the fundamentals fully support, pointing to a stock that looks overvalued on this metric.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1464 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Zillow Group Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, an easy framework on Simply Wall St’s Community page that lets you write the story behind your numbers by connecting your view of a company’s future revenues, earnings and margins to a financial forecast and, ultimately, a Fair Value you can compare to today’s price to decide whether to buy, hold or sell. The platform keeps that story live by updating the valuation whenever new information such as earnings, news or guidance arrives, meaning your thesis never goes stale. For Zillow Group, one investor might build a bullish Narrative that leans into digital adoption, rentals and Showcase revenues, expanding margins and a higher long term multiple, landing near the upper end of analyst fair values around $100. A more cautious investor could emphasize regulatory risks, cyclical housing demand and execution uncertainty, anchoring assumptions closer to the lower end near $66. Both can clearly see how their beliefs translate into numbers, how sensitive their Fair Value is to each input, and whether today’s share price offers enough potential upside to act.

Do you think there's more to the story for Zillow Group? Head over to our Community to see what others are saying!

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.

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