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What's in Store for Zillow Group (ZG) This Earnings Season?
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Zillow Group, Inc. (ZG - Free Report) is slated to report third-quarter 2020 results on Nov 5.
The Zacks Consensus Estimate for earnings per share has been steady at 15 cents in the past seven days. In the third quarter of 2019, Zillow Group had reported non-GAAP loss per share of 12 cents.
Zillow Group expects third-quarter revenues of $543-$581 million. The Zacks Consensus Estimate for revenues is pegged at $571.3 million, which indicates a decline of 23.3% from the year-ago quarter’s reported figure.
Notably, the company’s earnings surpassed the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of 40.33%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors to Note Ahead of Q3
Zillow Group’s third-quarter performance is likely to reflect continued strength in Internet, Media & Technology (IMT) and Mortgage segments along with robust demand for Zillow Offers.
Further, its digital capabilities like Zillow 3D Home technology that enable virtual home tours for Zillow-owned homes and virtual consultations from the company’s broker and Premier Agents as prospective buyers opt for social distancing amid the pandemic are likely to have contributed to third-quarter top line.
For the IMT segment, management expects to report third quarter revenues in the range of $369 to $384 million. The Zacks Consensus Estimate is pegged at $380 million, which represents a 13.3% improvement on a year-over-year basis.
Under the IMT segment, Premier Agent revenues are expected in the range of $272-$282 million, while the consensus estimates for the same stands at $279 million, which indicates growth of 15.8% year over year.
Management expects Premier Agent revenue to be driven by increase in sales as well as healthy partner retention along with discontinuation of Better Together partner discount.
Mortgage segment’s third quarter revenues are expected to be driven by improvement made to its mortgage technology platform. The revenue for this segment is forecast to be between $34 million and $37 million. The Zacks Consensus Estimate stands at $36.2 million in the Mortgage segment revenues, which indicates 43.1% year over year.
However, Zillow Group expects to report year over year decline in the Homes segment owing to the negative impact of lower inventory carried forward in third quarter owing to the temporary cessation of home buying in the second quarter amid the coronavirus outbreak. Also, management is on sidelines due to the prevailing uncertainties in the market due to the pandemic.
For the third quarter, Homes segment is expected to post revenues between $140 million and $160 million. The Zacks Consensus Estimate is pegged at $154 million.
Also, increased spend on product enhancements and advertising amid stiff competition is likely to limit 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 43.84% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Hologic, Inc. (HOLX - Free Report) has an Earnings ESP of +20.90% and carries a Zacks Rank of 2, currently.
Marchex, Inc. (MCHX - Free Report) has an Earnings ESP of +16.67% and currently carries a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Shutterstock
What's in Store for Zillow Group (ZG) This Earnings Season?
Zillow Group, Inc. (ZG - Free Report) is slated to report third-quarter 2020 results on Nov 5.
The Zacks Consensus Estimate for earnings per share has been steady at 15 cents in the past seven days. In the third quarter of 2019, Zillow Group had reported non-GAAP loss per share of 12 cents.
Zillow Group expects third-quarter revenues of $543-$581 million. The Zacks Consensus Estimate for revenues is pegged at $571.3 million, which indicates a decline of 23.3% from the year-ago quarter’s reported figure.
Notably, the company’s earnings surpassed the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of 40.33%, on average.
Zillow Group, Inc. Price and EPS Surprise
Zillow Group, Inc. price-eps-surprise | Zillow Group, Inc. Quote
Let’s see how things have shaped up prior to this announcement.
Factors to Note Ahead of Q3
Zillow Group’s third-quarter performance is likely to reflect continued strength in Internet, Media & Technology (IMT) and Mortgage segments along with robust demand for Zillow Offers.
Further, its digital capabilities like Zillow 3D Home technology that enable virtual home tours for Zillow-owned homes and virtual consultations from the company’s broker and Premier Agents as prospective buyers opt for social distancing amid the pandemic are likely to have contributed to third-quarter top line.
For the IMT segment, management expects to report third quarter revenues in the range of $369 to $384 million. The Zacks Consensus Estimate is pegged at $380 million, which represents a 13.3% improvement on a year-over-year basis.
Under the IMT segment, Premier Agent revenues are expected in the range of $272-$282 million, while the consensus estimates for the same stands at $279 million, which indicates growth of 15.8% year over year.
Management expects Premier Agent revenue to be driven by increase in sales as well as healthy partner retention along with discontinuation of Better Together partner discount.
Mortgage segment’s third quarter revenues are expected to be driven by improvement made to its mortgage technology platform. The revenue for this segment is forecast to be between $34 million and $37 million. The Zacks Consensus Estimate stands at $36.2 million in the Mortgage segment revenues, which indicates 43.1% year over year.
However, Zillow Group expects to report year over year decline in the Homes segment owing to the negative impact of lower inventory carried forward in third quarter owing to the temporary cessation of home buying in the second quarter amid the coronavirus outbreak. Also, management is on sidelines due to the prevailing uncertainties in the market due to the pandemic.
For the third quarter, Homes segment is expected to post revenues between $140 million and $160 million. The Zacks Consensus Estimate is pegged at $154 million.
Also, increased spend on product enhancements and advertising amid stiff competition is likely to limit 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 43.84% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Sunoco LP (SUN - Free Report) has an Earnings ESP of +1.00% and sports a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic, Inc. (HOLX - Free Report) has an Earnings ESP of +20.90% and carries a Zacks Rank of 2, currently.
Marchex, Inc. (MCHX - Free Report) has an Earnings ESP of +16.67% and currently carries a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>