ï€ Zillow Group, Inc. (ZG:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 31.0x Uniform P/E. However, even at these levels, the market is pricing in fairly bearish expectations for the firm. Although negative management sentiment suggests near-term upside may be limited, these overly-bearish expectations are likely to support longer-term outperformance should ZG just maintain profitability at current levels
ï€ Specifically, although management appears concerned about the impact of the recent hurricanes on Premier Agent revenues, and may lack confidence in their ability to increase penetration in their Premier Agent business, market expectations are for Uniform ROA to fall to levels not seen since 2011. At these valuations, should the firm just maintain Uniform ROA at current levels, equity upside would be warranted
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