Let’s talk about the popular Zillow Group, Inc. (NASDAQ:ZG). The company’s shares saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Zillow Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for Zillow Group
What’s the opportunity in Zillow Group?
Great news for investors – Zillow Group is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $78.26, but it is currently trading at US$59.21 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Zillow Group’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from Zillow Group?
NasdaqGS:ZG Earnings and Revenue Growth December 30th 2021
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Though in the case of Zillow Group, it is expected to deliver a negative earnings growth of -12%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Although ZG is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to ZG, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on ZG for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
With this in mind, we wouldn’t consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 4 warning signs for Zillow Group and we think they deserve your attention.
If you are no longer interested in Zillow Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.