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Zillow Group (ZG) to Report Q4 Earnings: What's in the Offing?

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Zacks Equity Research
·4 min read
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Zillow Group, Inc. ZG is slated to report fourth-quarter 2020 results on Feb 10.

The Zacks Consensus Estimate for earnings per share has been steady at 29 cents in the past 30 days. In fourth-quarter 2019, Zillow Group had reported non-GAAP loss per share of 26 cents.

Zillow Group expects fourth-quarter revenues in the range of $709-$748 million. The Zacks Consensus Estimate for revenues is pegged at $741.2 million, which indicates a decline of 21.5% from the year-ago quarter’s reported figure.

Zillow Group, Inc. Price and EPS Surprise

Zillow Group, Inc. Price and EPS Surprise
Zillow Group, Inc. Price and EPS Surprise

Zillow Group, Inc. price-eps-surprise | Zillow Group, Inc. Quote

The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of 65.64%, on average.

Factors to Note Ahead of Q4

Zillow Group’s fourth-quarter performance is likely to reflect continued strength in Internet, Media & Technology (IMT) and Mortgage segments.

For the IMT segment, management expects to report fourth-quarter revenues in the range of $400-$415 million. Higher customer traffic, robust partner retention and increasing partner demand across the company’s marketplace businesses are likely to drive top line for IMT segment.

The Zacks Consensus Estimate for IMT segment is pegged at $407 million, which suggests a 27.2% increase on a year-over-year basis.

In the IMT segment, Premier Agent revenues are expected in the range of $300-$310 million. The consensus estimates for the same stands at $299 million, at present.

Management expects Premier Agent revenue to be driven by increase in traffic and healthy partner demand.

Further, its digital capabilities like Zillow 3D Home technology that facilitate virtual home tours for Zillow-owned homes and virtual consultations from the company’s broker and Premier Agents are likely to have positively impacted top line in the fourth quarter.

Mortgage segment’s fourth-quarter revenues are expected to be driven by improvement in mortgage technology platform. Revenues in this segment are forecast between $49 million and $53 million. The Zacks Consensus Estimate for revenues in the Mortgage segment is pegged at $48.68 million.

Zillow Group expects to report sequential improvement in the Homes segment owing to accelerating purchasing and reselling activity across all the 25 markets.

For the fourth quarter, Homes segment is expected to post revenues between $260 million and $280 million. The Zacks Consensus Estimate for revenues in the Homes segment is pegged at $289 million.

Nonetheless, increased spend on product enhancements and advertising amid intensifying competition is likely to have limited margin expansion in the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Zillow Group this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Zillow Group has an Earnings ESP of -12.28% and a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

CDW Corporation CDW has an Earnings ESP of +3.4% and carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

CrowdStrike CRWD has an Earnings ESP of +57.75% and carries a Zacks Rank of 2.

Workday WDAY has an Earnings ESP of +0.9% and currently carries a Zacks Rank of 2.

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