ZG - Embedded Expectations Analysis - 2020 03 30
ï€ Zillow Group, Inc. (ZG:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 26.1x Uniform P/E. At these levels, markets are pricing in bearish expectations for the firm, and management may be concerned about their business model innovations, the strength of their balance sheet, and customer experienceï€ Specifically, management may be concerned about increased partner churn, their business model innovation, and the impact of ongoing testing and iterations across their markets and businesses. In addition, they may lack confidence in their ability to sustain Q4 EBITDA and returns on homes sold performance, improve conversion rates, and continue to improve customer satisfaction. Moreover, they may be exaggerating the strength of their balance sheet, the potential of their Premier Agent opportunity, and the quality of their Tour It Now feature. Also, they may lack confidence in their ability to expand IMT segment EBITDA margins, grow their unique user base, and provide a seamless integrated transaction experience for customers. Finally, they may be concerned about the lack of software investments in real estate and Zillow Offers adjacent transactions such as titles, escrow, and mortgages
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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