Loss-Making Zillow Group, Inc. (NASDAQ:ZG) Set To Breakeven

March 03, 2022
  •  Updated
June 17, 2022
NasdaqGS:ZG
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We feel now is a pretty good time to analyse Zillow Group, Inc.'s (NASDAQ:ZG) business as it appears the company may be on the cusp of a considerable accomplishment. Zillow Group, Inc., a digital real estate company, operates real estate brands on mobile applications and Websites in the United States. On 31 December 2021, the US$14b market-cap company posted a loss of US$528m for its most recent financial year. Many investors are wondering about the rate at which Zillow Group will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Zillow Group

Consensus from 21 of the American Real Estate analysts is that Zillow Group is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$170m in 2022. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 49%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqGS:ZG Earnings Per Share Growth March 3rd 2022

Given this is a high-level overview, we won’t go into details of Zillow Group's upcoming projects, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Zillow Group is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Zillow Group's case is 91%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Zillow Group which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Zillow Group, take a look at Zillow Group's company page on Simply Wall St. We've also put together a list of important aspects you should look at:

  1. Valuation: What is Zillow Group worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Zillow Group is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Zillow Group’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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