ZG - Embedded Expectations Analysis - 2019 07 25
Zillow Group, Inc. (ZG:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 35.3x Uniform P/E. However, even at these levels, markets are pricing in bearish expectations for the firm, while management has concerns about their pricing strategy and portfolio strength.Specifically, management is confident their inventory will begin to age as Zillow purchases more homes to sell. Moreover, management may be concerned about potential inventory mark-downs, and may be downplaying concerns about pricing and the footprint required for their Mortgage business. Furthermore, they may be exaggerating the potential for Zillow to leverage flex pricing to drive growth and the value proposition of their Premier Agent app to their customers.
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