Zillow Group (Z) and CoStar Group (CSGP) Critical Survey

Zillow Group (NASDAQ:Z) and CoStar Group (NASDAQ:CSGP) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

This table compares Zillow Group and CoStar Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zillow Group -8.99% -1.63% -1.30%
CoStar Group 21.76% 10.09% 9.12%

Institutional and Insider Ownership

66.8% of Zillow Group shares are owned by institutional investors. Comparatively, 96.9% of CoStar Group shares are owned by institutional investors. 19.9% of Zillow Group shares are owned by company insiders. Comparatively, 2.5% of CoStar Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Zillow Group has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, CoStar Group has a beta of 1.46, meaning that its share price is 46% more volatile than the S&P 500.

Earnings & Valuation

This table compares Zillow Group and CoStar Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zillow Group $1.33 billion 5.19 -$119.86 million N/A N/A
CoStar Group $1.19 billion 15.30 $238.33 million $7.40 67.41

CoStar Group has lower revenue, but higher earnings than Zillow Group.

Analyst Recommendations

This is a summary of current ratings for Zillow Group and CoStar Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zillow Group 2 4 4 0 2.20
CoStar Group 1 0 6 0 2.71

Zillow Group presently has a consensus target price of $38.84, suggesting a potential upside of 14.73%. CoStar Group has a consensus target price of $537.00, suggesting a potential upside of 7.65%. Given Zillow Group’s higher possible upside, analysts clearly believe Zillow Group is more favorable than CoStar Group.

Summary

CoStar Group beats Zillow Group on 9 of the 12 factors compared between the two stocks.

About Zillow Group

Zillow Group, Inc. operates real estate and home-related brands on mobile and the Web in the United States. The company offers a portfolio of brands and products to empowering consumers with unparalleled data, inspiration, and knowledge around homes and connecting them with real estate professionals. Its brands focus on various stages of the home lifecycle, including renting, buying, selling, and financing. The company's portfolio of consumer brands comprise real estate and rental marketplaces, such as Zillow, Trulia, Mortgage Lenders of America, StreetEasy, HotPads, Naked Apartments, RealEstate.com, and Out East. It also provides a suite of marketing software and technology solutions; and owns and operates various business brands for real estate, rental, and mortgage professionals comprising Mortech, dotloop, Bridge Interactive, and New Home Feed. In addition, the company offers advertising services. Zillow Group, Inc. was incorporated in 2004 and is headquartered in Seattle, Washington.

About CoStar Group

CoStar Group, Inc. provides information, analytics, and online marketplaces to the commercial real estate industry in the United States and the United Kingdom. The company offers CoStar Property Professional service that offers inventory of office, industrial, retail, and multifamily properties and land. It also provides CoStar COMPS Professional that covers comparable commercial real estate sales information; CoStar Tenant, an online business-to-business prospecting and analytical tool; CoStar Lease Comps, a solution to capture, manage, and maintain lease data; CoStar Lease Analysis, a workflow tool; CoStar Advertising to market a space for lease or a property for sale; CoStar Private Sale Network, which provides custom-designed and branded Websites; and CoStar and CoStar Go CoStar mobile apps. In addition, the company offers CoStar Real Estate Manager, a real estate and asset management, and lease accounting software; CoStar Risk Analytics, a commercial real estate risk management tool; CoStar Brokerage Applications; CoStar Investment Analysis Request, a business intelligence software; and CoStar Investment Analysis Portfolio Maximizer, a real estate portfolio management software. Further, it provides apartment marketing sites, such as Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Apartamentos.com, WestsideRentals.com, and Cozy.co; LoopNet Premium Lister and LoopNet Power Listings for commercial real estate professionals; LoopLink, an online real estate marketing and database services suite; Listing Manager, an online listing tool; Realla, a commercial property listings and data management platform; LandsofAmerica, LandAndFarm, and LandWatch online marketplaces for rural land for sale; and BizBuySell and BizQuest online marketplaces for operating businesses for sale. The company has a strategic relationship with Buxton Company. The company was founded in 1987 and is headquartered in Washington, the District of Columbia.

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