How Did Zillow Group Inc’s (NASDAQ:ZG) Earnings Growth Stack Up Against The Industry?
Assessing Zillow Group Inc’s (NASDAQ:ZG) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess ZG’s recent performance announced on 31 December 2017 and evaluate these figures to its long-term trend and industry movements. Check out our latest analysis for Zillow Group
Commentary On ZG’s Past Performance
I prefer to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique enables me to examine many different companies on a similar basis, using the most relevant data points. For Zillow Group, its latest trailing-twelve-month earnings is -US$94.42M, which, against the previous year’s level, has become less negative. Given that these figures are fairly myopic, I’ve estimated an annualized five-year figure for ZG’s net income, which stands at -US$67.49M. This means that, Zillow Group has historically performed better than recently, while it seems like earnings are now heading back towards to right direction again.
We can further evaluate Zillow Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Zillow Group’s top-line has grown by 39.52% on average, implying that the company is in a high-growth phase with expenses racing ahead revenues, leading to annual losses. Eyeballing growth from a sector-level, the US internet industry has been growing its average earnings by double-digit 14.78% over the past year, and 16.35% over the past five. This suggests that, although Zillow Group is currently unprofitable, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Zillow Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will happen in the future and when. The most valuable step is to assess company-specific issues Zillow Group may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Zillow Group to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for ZG’s future growth? Take a look at our free research report of analyst consensus for ZG’s outlook.
2. Financial Health: Is ZG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
