Earnings Preview: Will Zillow Mirror the Real Estate Market?

Zillow Z is set to report its latest earnings after the closing bell on Wednesday. Wall Street analysts have a consensus estimate of a 3 cent per share loss. Over the past three months, that average estimate has increased from a loss of 4 cents. However, it has remained at a loss of 3 cents for the past month. For the year, analysts are predicting net income of 5 cents per share, a significant increase from the net loss of 9 cents last year. At the end of January, Benchmark called Zillow a high-growth, high-multiple stock with a small penetration of a vast market, adding that it expects sustainable strong growth will keep the stock momentum positive. Benchmark initiated coverage of Z at Buy. The Company
The Seattle-based company is the leader in digital real estate. According to Benchmark, millions of users visit Zillow.com for housing information including estimated value, tax history, neighboring house value and more. “Revenue is generated from real estate professionals (realtors) who sponsor designated zip-codes. The other source of revenue is display advertising.” Competitor include Market Leader LEDR, which provides real estate professionals with the tools and services they need to manage and grow their real estate businesses, and Move MOVE, which operates an online network of Websites for real estate search, finance, moving and home enthusiasts and provides a resource for consumers seeking the online information and connections they need regarding real estate. Performance
Zillow will hope not to fall below estimates this quarter after beating forecasts last quarter, when it beat expectations as it reported profit of 5 cents versus a mean estimate of net income of one cent. Benchmark believes Zillow will deliver strong and sustained growth over the short- and long-term. “We project 2012 total revenue growth of 56% y/y with EBITDA growth of 75%. Our estimated compound annual growth rate (CAGR) from 2012-2015 for revenue and EBITDA is 36% and 55%, respectively.” Between December 12, 2011 and February 9, 2012, Zillow has seen its stock price rise $8.46 (35.5 percent), from $23.84 to $32.30. It saw shares rise for eight straight days in August last year, increasing 55.2 percent ($13.22) over that span. Unfortunately, shares fell for eight straight days in November, dropping 23.3 percent (-$6.86).