Zillow Group (ZG) shares have edged higher lately, trading up about 1% over the past week, with a modest rebound from declines seen in the past month. Investors may be watching for the next catalyst or shift in sentiment around the stock.
Despite Zillow Group's recent 1% bump and some short-term volatility, the company’s longer view paints a distinctly different picture. While the 1-year share price return has been subdued, total shareholder return over the past 12 months sits at a solid 13.4%, with a remarkable 143% total return over three years. That momentum, though off its highs, suggests that investors are weighing Zillow’s rebound potential against evolving industry risks and opportunities.
With shares still trading roughly 24% below analysts’ targets and recent revenue growth outpacing many rivals, the real question is whether Zillow Group is undervalued at today’s price or if future promise is already fully reflected.
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Most Popular Narrative: 20.9% Undervalued
Zillow Group's most widely followed narrative places its fair value at $88.46, which is notably above the last close price of $69.96. The valuation reflects continued confidence in strong fundamental growth drivers and scalable business model enhancements.
The accelerated digital transformation of real estate, combined with Zillow's leading traffic, engagement, and product innovation, including 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.
What is the secret behind this double-digit upside? Fierce product innovation, a relentless push for higher conversion rates, and strong growth expectations are at the heart of the narrative. Ready to uncover the pivotal financial forecasts and core assumptions fueling this valuation? Explore what could power Zillow's next leap.
However, persistent low home affordability or additional real estate commission changes could quickly undermine Zillow's growth and cast doubt on this optimistic outlook.
While fair value models see upside, Zillow Group’s price-to-sales ratio stands at 7.1x, which is well above its peer average of 3.6x and the industry average of 3x. The fair ratio points to 4.2x, suggesting the current market price may carry more risk than opportunity. Could a reversion to the mean change the landscape for investors?
If you have a different perspective or want to dig into the numbers yourself, it takes just a few minutes to build your own view. Do it your way
A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Zillow Group.
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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.
Valuation is complex, but we're here to simplify it.
Discover if Zillow Group might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
