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Forget Zillow, Buy These 4 Real Estate-Operations Stocks

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Zillow Group, Inc.’s (Z - Free Report) shares underperformed the Zacks categorized Real Estate – Operations industry in the past three months. In fact, shares of the company declined around 8%, whereas the gained 2.7%. Also, in the last 30 days, its full-year 2017 earnings estimates dived 40% to 45 cents per share, indicating tepid prospects for the company.

Also, Zillow’s valuation looks far stretched when compared with the Real Estate – Operations industry. The company currently has a very high trailing 12-month price-to-earnings ratio of 75.36. This level compares unfavorably with what the industry saw over the last one year. The ratio is well above the industry’s average of 22.79. Also, the stock’s current valuation is a lot higher than its own historical price-to-earnings ratio of 46.47. Therefore, investors may be unwilling to pay further premium.

Currently, this Seattle, WA-based real estate company, engaged in offering real estate and home-related brands on mobile and web, carries a Zacks Rank #4 (Sell). Also, the company has a very poor VGM Score of “F.”


All is Not Unwell

The Real Estate–Operations industry includes companies engaged in providing management, corporate, financial and investment management services to real owners, users, lenders and investors. The services also include real estate brokerage and agent services, real estate appraisal services and consulting. The real estate investment trusts (REITs) do not belong to this industry.

Performance of real estate service providers depends to a great extent on the developments in the real estate market as well as the economy.

Despite the rate hike, interest rates are still extremely low. The REITs are expected to show improved performance with low-debt ratios and robust equity issuance, providing huge opportunities for Real Estate – Operations firms.

Despite Zillow’s bleak outlook, the industry it belongs to holds better prospects. Real Estate – Operations is a 27-company strong Finance Sector industry. The Zacks Industry Rank system pegs this faction at #70 out of more than 250 industries (top 27%).
 
In the last one year, though Real Estate – Operations underperformed the S&P 500 Composite Market index, it managed a handsome return of 6.1%.
 
Four Choices

It’s the right time to forget Zillow and opt for lucrative stocks from the same space. To make things easy, we have used a very simple screening. Stocks from Real Estate–Operations, with solid Zacks Rank #1 (Strong Buy) or 2 (Buy) have been taken as the yardsticks.

CBRE Group, Inc. is a Los Angeles, CA-based commercial real estate services and investment firm, offering a wide range of services to tenants, owners, lenders and investors in office, retail, industrial, multi-family and other types of commercial real estates.

Zacks Rank #2

Toronto, ON-based Colliers International Group Inc. (CIGI - Free Report) is engaged in providing commercial real estate services to governments, financial institutions, corporations and individuals.

Zacks Rank #2

Landmark Infrastructure Partners LP is an El Segundo, CA-based real estate company engaged in the acquisition, ownership and management of real estate properties.

Zacks Rank #2

London, UK-based LSL Property Services Plc (LSLPF - Free Report) is engaged in providing residential property services to the consumers and mortgage lenders.

Zacks Rank #2

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Zillow Group, Inc. (Z) - free report >>

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LSL PROPERTY (LSLPF) - free report >>

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