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Zillow Group (ZG) Announces $400M Senior Notes Offering
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Zillow Group, Inc. (ZG - Free Report) aims to price $400 million aggregate principal amount of Convertible Senior Notes due to mature in 2021. We believe these notes will provide the company financial flexibility to drive long-term growth. The offering is subject to certain customary conditions.
Initial buyers will have a 30-day option of buying all or additional notes worth $60 million aggregate principal amount of Notes on the same terms and conditions to cover over-allotments, if any.
Zillow Group plans to utilize the net proceeds from the offering for general corporate purposes, which may include repurchases of outstanding Convertible Senior of its wholly owned subsidiary, Trulia, LLC, (bearing a rate of 2.75%) due in 2020. Also, the proceeds from the offering shall be used to finance its acquisitions related expenses and repay a part of the company’s outstanding debt.
Zillow Group’s stock price history reveals that the company has been doing well for a long time. In fact, so far this year, shares of Zillow have risen 31.6%, outperforming the Zacks categorized Internet-Services industry, which generated a negative return of 1.6%.
Zillow offers mobile and web solutions that enable users to find important information about homes. The company reported better-than-expected third-quarter fiscal 2016 results on Nov 2, beating the Zacks Consensus Estimate on both counts.
The company posted third-quarter adjusted earnings of 3 cents per share as against the Zacks Consensus Estimate of a loss of 2 cents. Also, Zillow Group’s third-quarter revenues of $225 million not only increased 35% year over year, it surpassed the Zacks Consensus Estimate of $220 million.
Zillow Group exited the quarter with cash and cash equivalents and short-term investments of $444.6 million. Long-term debt on the balance sheet totaled $230 million.
Cash flow used by operating activities during nine months ended Sep 30, 2016 was $30.4 million.
In the stringent regulatory landscape, this offering is expected to further enhance the company’s balance sheet as well as support its future growth. Additionally, it will assist the company to bring down its cost of capital.
Last Words
We believe that strong traffic growth, frequent product launches and the growing Agent business are positives. In particular, product launches like Zillow Real Estate and Zillow Digs App for Apple Inc.'s (AAPL - Free Report) iPhone and iPad are expected to drive growth.
Moreover, the Trulia acquisition will not only make Zillow the number one online real estate information provider in the U.S., but also help it to compete against Move Inc., which has now been acquired by News Corp.
Zillow also entered into several partnerships with real estate listing companies and real estate brokers to enhance its product portfolio. However, the company is currently in the high investment phase and therefore profitability might be an issue in the to-be reported quarter.
Cirrus Logic and NetApp has a long-term earnings per share growth rate of 17.5% and 10.7%, respectively.
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Zillow Group (ZG) Announces $400M Senior Notes Offering
Zillow Group, Inc. (ZG - Free Report) aims to price $400 million aggregate principal amount of Convertible Senior Notes due to mature in 2021. We believe these notes will provide the company financial flexibility to drive long-term growth. The offering is subject to certain customary conditions.
Initial buyers will have a 30-day option of buying all or additional notes worth $60 million aggregate principal amount of Notes on the same terms and conditions to cover over-allotments, if any.
Zillow Group plans to utilize the net proceeds from the offering for general corporate purposes, which may include repurchases of outstanding Convertible Senior of its wholly owned subsidiary, Trulia, LLC, (bearing a rate of 2.75%) due in 2020. Also, the proceeds from the offering shall be used to finance its acquisitions related expenses and repay a part of the company’s outstanding debt.
Zillow Group’s stock price history reveals that the company has been doing well for a long time. In fact, so far this year, shares of Zillow have risen 31.6%, outperforming the Zacks categorized Internet-Services industry, which generated a negative return of 1.6%.
Zillow offers mobile and web solutions that enable users to find important information about homes. The company reported better-than-expected third-quarter fiscal 2016 results on Nov 2, beating the Zacks Consensus Estimate on both counts.
The company posted third-quarter adjusted earnings of 3 cents per share as against the Zacks Consensus Estimate of a loss of 2 cents. Also, Zillow Group’s third-quarter revenues of $225 million not only increased 35% year over year, it surpassed the Zacks Consensus Estimate of $220 million.
Zillow Group exited the quarter with cash and cash equivalents and short-term investments of $444.6 million. Long-term debt on the balance sheet totaled $230 million.
Cash flow used by operating activities during nine months ended Sep 30, 2016 was $30.4 million.
In the stringent regulatory landscape, this offering is expected to further enhance the company’s balance sheet as well as support its future growth. Additionally, it will assist the company to bring down its cost of capital.
Last Words
We believe that strong traffic growth, frequent product launches and the growing Agent business are positives. In particular, product launches like Zillow Real Estate and Zillow Digs App for Apple Inc.'s (AAPL - Free Report) iPhone and iPad are expected to drive growth.
Moreover, the Trulia acquisition will not only make Zillow the number one online real estate information provider in the U.S., but also help it to compete against Move Inc., which has now been acquired by News Corp.
Zillow also entered into several partnerships with real estate listing companies and real estate brokers to enhance its product portfolio. However, the company is currently in the high investment phase and therefore profitability might be an issue in the to-be reported quarter.
Zillow currently carries a Zacks Rank #2 (Buy). Stocks worth considering include Cirrus Logic, Inc. (CRUS - Free Report) and NetApp Inc. (NTAP - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Cirrus Logic and NetApp has a long-term earnings per share growth rate of 17.5% and 10.7%, respectively.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>