Intrinsic value of Zillow Group, Inc. - Z

Previous Close

$47.06

  Intrinsic Value

$6.01

stock screener

  Rating & Target

str. sell

-87%

Previous close

$47.06

 
Intrinsic value

$6.01

 
Up/down potential

-87%

 
Rating

str. sell

We calculate the intrinsic value of Z stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 9.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  29.40
  26.96
  24.76
  22.79
  21.01
  19.41
  17.97
  16.67
  15.50
  14.45
  13.51
  12.66
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.30
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
Revenue, $m
  1,726
  2,192
  2,734
  3,357
  4,063
  4,851
  5,723
  6,677
  7,712
  8,827
  10,019
  11,287
  12,629
  14,044
  15,530
  17,087
  18,714
  20,411
  22,179
  24,019
  25,932
  27,921
  29,988
  32,136
  34,368
  36,689
  39,102
  41,612
  44,224
  46,943
Variable operating expenses, $m
  1,437
  1,765
  2,148
  2,587
  3,084
  3,640
  4,255
  4,927
  5,657
  6,443
  7,063
  7,957
  8,904
  9,901
  10,949
  12,046
  13,193
  14,390
  15,636
  16,933
  18,282
  19,685
  21,142
  22,656
  24,230
  25,866
  27,567
  29,336
  31,178
  33,095
Fixed operating expenses, $m
  316
  323
  330
  337
  345
  352
  360
  368
  376
  384
  393
  401
  410
  419
  428
  438
  447
  457
  467
  478
  488
  499
  510
  521
  532
  544
  556
  568
  581
  594
Total operating expenses, $m
  1,753
  2,088
  2,478
  2,924
  3,429
  3,992
  4,615
  5,295
  6,033
  6,827
  7,456
  8,358
  9,314
  10,320
  11,377
  12,484
  13,640
  14,847
  16,103
  17,411
  18,770
  20,184
  21,652
  23,177
  24,762
  26,410
  28,123
  29,904
  31,759
  33,689
Operating income, $m
  -27
  104
  257
  433
  634
  859
  1,108
  1,382
  1,679
  2,000
  2,563
  2,928
  3,315
  3,724
  4,153
  4,603
  5,073
  5,564
  6,075
  6,608
  7,162
  7,738
  8,337
  8,959
  9,606
  10,279
  10,979
  11,707
  12,465
  13,254
EBITDA, $m
  261
  410
  584
  785
  1,014
  1,270
  1,553
  1,864
  2,202
  2,566
  2,956
  3,372
  3,812
  4,275
  4,763
  5,274
  5,808
  6,366
  6,947
  7,551
  8,180
  8,835
  9,515
  10,221
  10,956
  11,720
  12,515
  13,341
  14,202
  15,098
Interest expense (income), $m
  0
  57
  74
  94
  118
  146
  176
  211
  249
  291
  337
  385
  438
  493
  552
  614
  679
  748
  819
  894
  971
  1,052
  1,136
  1,223
  1,314
  1,408
  1,506
  1,608
  1,713
  1,823
  1,938
Earnings before tax, $m
  -84
  30
  162
  315
  488
  682
  897
  1,132
  1,388
  1,663
  2,177
  2,491
  2,822
  3,172
  3,539
  3,923
  4,325
  4,745
  5,182
  5,637
  6,110
  6,602
  7,114
  7,645
  8,198
  8,773
  9,371
  9,993
  10,641
  11,316
Tax expense, $m
  0
  8
  44
  85
  132
  184
  242
  306
  375
  449
  588
  672
  762
  856
  955
  1,059
  1,168
  1,281
  1,399
  1,522
  1,650
  1,783
  1,921
  2,064
  2,214
  2,369
  2,530
  2,698
  2,873
  3,055
Net income, $m
  -84
  22
  118
  230
  356
  498
  655
  827
  1,013
  1,214
  1,590
  1,818
  2,060
  2,315
  2,583
  2,864
  3,157
  3,464
  3,783
  4,115
  4,460
  4,820
  5,193
  5,581
  5,985
  6,404
  6,841
  7,295
  7,768
  8,261

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,657
  4,643
  5,793
  7,113
  8,607
  10,278
  12,125
  14,146
  16,339
  18,701
  21,227
  23,913
  26,757
  29,754
  32,903
  36,201
  39,648
  43,243
  46,989
  50,887
  54,941
  59,155
  63,534
  68,085
  72,814
  77,731
  82,843
  88,160
  93,694
  99,455
Adjusted assets (=assets-cash), $m
  3,657
  4,643
  5,793
  7,113
  8,607
  10,278
  12,125
  14,146
  16,339
  18,701
  21,227
  23,913
  26,757
  29,754
  32,903
  36,201
  39,648
  43,243
  46,989
  50,887
  54,941
  59,155
  63,534
  68,085
  72,814
  77,731
  82,843
  88,160
  93,694
  99,455
Revenue / Adjusted assets
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
Average production assets, $m
  1,600
  2,032
  2,535
  3,112
  3,766
  4,497
  5,305
  6,189
  7,149
  8,182
  9,288
  10,463
  11,707
  13,019
  14,396
  15,839
  17,348
  18,921
  20,560
  22,265
  24,039
  25,883
  27,799
  29,790
  31,860
  34,011
  36,247
  38,574
  40,995
  43,516
Working capital, $m
  197
  250
  312
  383
  463
  553
  652
  761
  879
  1,006
  1,142
  1,287
  1,440
  1,601
  1,770
  1,948
  2,133
  2,327
  2,528
  2,738
  2,956
  3,183
  3,419
  3,664
  3,918
  4,183
  4,458
  4,744
  5,041
  5,351
Total debt, $m
  1,105
  1,409
  1,765
  2,172
  2,634
  3,150
  3,721
  4,346
  5,023
  5,753
  6,534
  7,364
  8,242
  9,169
  10,141
  11,161
  12,226
  13,337
  14,494
  15,699
  16,951
  18,253
  19,607
  21,013
  22,474
  23,993
  25,573
  27,216
  28,926
  30,706
Total liabilities, $m
  1,130
  1,435
  1,790
  2,198
  2,660
  3,176
  3,747
  4,371
  5,049
  5,778
  6,559
  7,389
  8,268
  9,194
  10,167
  11,186
  12,251
  13,362
  14,520
  15,724
  16,977
  18,279
  19,632
  21,038
  22,500
  24,019
  25,598
  27,241
  28,951
  30,732
Total equity, $m
  2,527
  3,208
  4,003
  4,915
  5,948
  7,102
  8,378
  9,775
  11,290
  12,922
  14,668
  16,524
  18,489
  20,560
  22,736
  25,015
  27,396
  29,881
  32,469
  35,163
  37,964
  40,876
  43,902
  47,047
  50,315
  53,712
  57,244
  60,919
  64,742
  68,724
Total liabilities and equity, $m
  3,657
  4,643
  5,793
  7,113
  8,608
  10,278
  12,125
  14,146
  16,339
  18,700
  21,227
  23,913
  26,757
  29,754
  32,903
  36,201
  39,647
  43,243
  46,989
  50,887
  54,941
  59,155
  63,534
  68,085
  72,815
  77,731
  82,842
  88,160
  93,693
  99,456
Debt-to-equity ratio
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
Adjusted equity ratio
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -84
  22
  118
  230
  356
  498
  655
  827
  1,013
  1,214
  1,590
  1,818
  2,060
  2,315
  2,583
  2,864
  3,157
  3,464
  3,783
  4,115
  4,460
  4,820
  5,193
  5,581
  5,985
  6,404
  6,841
  7,295
  7,768
  8,261
Depreciation, amort., depletion, $m
  288
  306
  328
  352
  380
  411
  445
  482
  523
  567
  394
  443
  496
  552
  610
  671
  735
  802
  871
  943
  1,019
  1,097
  1,178
  1,262
  1,350
  1,441
  1,536
  1,634
  1,737
  1,844
Funds from operations, $m
  204
  328
  446
  582
  736
  909
  1,100
  1,309
  1,536
  1,781
  1,983
  2,262
  2,556
  2,867
  3,193
  3,535
  3,893
  4,265
  4,654
  5,058
  5,479
  5,916
  6,371
  6,843
  7,335
  7,845
  8,377
  8,930
  9,505
  10,105
Change in working capital, $m
  45
  53
  62
  71
  80
  90
  99
  109
  118
  127
  136
  145
  153
  161
  169
  177
  185
  193
  202
  210
  218
  227
  236
  245
  254
  265
  275
  286
  298
  310
Cash from operations, $m
  160
  275
  384
  511
  656
  819
  1,000
  1,200
  1,418
  1,654
  1,847
  2,117
  2,403
  2,706
  3,024
  3,358
  3,707
  4,072
  4,452
  4,849
  5,261
  5,690
  6,135
  6,599
  7,080
  7,581
  8,102
  8,644
  9,207
  9,795
Maintenance CAPEX, $m
  -52
  -68
  -86
  -107
  -132
  -160
  -191
  -225
  -262
  -303
  -347
  -394
  -443
  -496
  -552
  -610
  -671
  -735
  -802
  -871
  -943
  -1,019
  -1,097
  -1,178
  -1,262
  -1,350
  -1,441
  -1,536
  -1,634
  -1,737
New CAPEX, $m
  -364
  -431
  -503
  -578
  -654
  -731
  -808
  -884
  -960
  -1,033
  -1,105
  -1,176
  -1,244
  -1,311
  -1,378
  -1,443
  -1,508
  -1,573
  -1,639
  -1,706
  -1,774
  -1,844
  -1,916
  -1,991
  -2,069
  -2,151
  -2,237
  -2,327
  -2,421
  -2,521
Cash from investing activities, $m
  -416
  -499
  -589
  -685
  -786
  -891
  -999
  -1,109
  -1,222
  -1,336
  -1,452
  -1,570
  -1,687
  -1,807
  -1,930
  -2,053
  -2,179
  -2,308
  -2,441
  -2,577
  -2,717
  -2,863
  -3,013
  -3,169
  -3,331
  -3,501
  -3,678
  -3,863
  -4,055
  -4,258
Free cash flow, $m
  -256
  -224
  -205
  -174
  -130
  -72
  2
  91
  196
  318
  395
  548
  716
  898
  1,095
  1,305
  1,528
  1,764
  2,012
  2,272
  2,544
  2,827
  3,122
  3,429
  3,749
  4,080
  4,424
  4,781
  5,152
  5,537
Issuance/(repayment) of debt, $m
  256
  305
  355
  408
  462
  516
  571
  625
  678
  730
  781
  830
  879
  926
  973
  1,019
  1,065
  1,111
  1,157
  1,205
  1,253
  1,302
  1,353
  1,406
  1,461
  1,519
  1,580
  1,643
  1,710
  1,780
Issuance/(repurchase) of shares, $m
  659
  660
  676
  682
  676
  656
  621
  570
  502
  418
  156
  38
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  915
  965
  1,031
  1,090
  1,138
  1,172
  1,192
  1,195
  1,180
  1,148
  937
  868
  879
  926
  973
  1,019
  1,065
  1,111
  1,157
  1,205
  1,253
  1,302
  1,353
  1,406
  1,461
  1,519
  1,580
  1,643
  1,710
  1,780
Total cash flow (excl. dividends), $m
  658
  740
  826
  916
  1,008
  1,101
  1,194
  1,286
  1,376
  1,465
  1,332
  1,416
  1,594
  1,824
  2,067
  2,324
  2,593
  2,875
  3,169
  3,476
  3,796
  4,129
  4,476
  4,836
  5,210
  5,599
  6,003
  6,424
  6,862
  7,317
Retained Cash Flow (-), $m
  -659
  -681
  -795
  -912
  -1,033
  -1,154
  -1,276
  -1,397
  -1,515
  -1,632
  -1,745
  -1,856
  -1,965
  -2,071
  -2,176
  -2,279
  -2,382
  -2,485
  -2,588
  -2,694
  -2,801
  -2,912
  -3,026
  -3,145
  -3,268
  -3,397
  -3,532
  -3,674
  -3,824
  -3,981
Prev. year cash balance distribution, $m
  1,315
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  1,315
  59
  32
  4
  -25
  -54
  -82
  -111
  -139
  -167
  -414
  -440
  -371
  -247
  -108
  45
  211
  390
  581
  783
  995
  1,217
  1,450
  1,691
  1,942
  2,202
  2,471
  2,750
  3,038
  3,336
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  1,261
  54
  28
  3
  -19
  -39
  -56
  -69
  -80
  -87
  -197
  -188
  -141
  -83
  -32
  11
  46
  72
  89
  99
  103
  101
  95
  86
  76
  64
  53
  43
  33
  25
Current shareholders' claim on cash, %
  89.7
  82.4
  76.9
  72.7
  69.5
  67.0
  65.0
  63.6
  62.5
  61.7
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4
  61.4

Zillow Group, Inc. operates real estate and home-related information marketplaces on mobile and the Web in the United States. The company offers a portfolio of brands and products to enable people find information about homes and connect with local professionals. Its brands focus on various stages of the home lifecycle, including renting, buying, selling, and financing. The company’s portfolio of consumer brands comprises real estate and rental marketplaces, such as Zillow, Trulia, StreetEasy, HotPads, and Naked Apartments. It also owns and operates various brands comprising Mortech, dotloop, Bridge Interactive, and Retsly, as well as provides advertising services to real estate agents, and rental and mortgage professionals. The company was incorporated in 2004 and is headquartered in Seattle, Washington.

FINANCIAL RATIOS  of  Zillow Group, Inc. (Z)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

Z stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the Z stock intrinsic value calculation we used $1334 million for the last fiscal year's total revenue generated by Zillow Group, Inc.. The default revenue input number comes from 0001 income statement of Zillow Group, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our Z stock valuation model: a) initial revenue growth rate of 29.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for Z is calculated based on our internal credit rating of Zillow Group, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Zillow Group, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of Z stock the variable cost ratio is equal to 87%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $309 million in the base year in the intrinsic value calculation for Z stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.7% for Zillow Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Zillow Group, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the Z stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for Z are equal to 92.7%.

Life of production assets of 23.6 years is the average useful life of capital assets used in Zillow Group, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for Z is equal to 11.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3267.179 million for Zillow Group, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 204.509 million for Zillow Group, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Zillow Group, Inc. at the current share price and the inputted number of shares is $9.6 billion.

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