NEW YORK ( TheStreet) -- Even if you think online real estate companies like Zillow (Z), Trulia (TRLA) and Move (MOVE) hold great promise, the massive run-up in their shares ahead of any solid profits is a bit daunting.
By contrast, a couple of lesser-known rivals look remarkably cheap since they are buried inside other companies already churning out steady profits.
Many investors in Zillow, Trulia and Move are probably unfamiliar with Altisource Portfolio Solutions (ASPS) and Nationstar Mortgage Holdings (NSM). Indeed, many sell-side analysts who follow Zillow and Trulia probably haven't heard of them.
That's because Nationstar and Altisource are viewed by Wall Street as mortgage companies and are covered by analysts who follow the mortgage industry, while Zillow, Trulia and Move are seen as Internet companies and are followed by the same group of analysts who follow Facebook (FB), Google (GOOG)and LinkedIn (LNKD).For the most part, that's appropriate, since the bulk of Nationstar's revenue comes from servicing mortgages. Altisource gets most of its revenue by providing administrative support to servicers of defaulted mortgages. It has close ties to largest customer, Ocwen Financial (OCN), the largest servicer of deliquent mortgages in the U.S. However, both Nationstar and Altisource have online home auction platforms that could compete with Trulia and Zillow. Altisource's platform, hubzu.com, looks to be much further along than Nationstar's homesearch.com. Hubzu 2012 revenue was $53.2 million, compared to $116 million for Zillow and $68 million for Trulia. They are comparable-sized businesses, in other words, except that Hubzu accounted for just over 9% of Altisource's $568 million in 2012 revenue. Hubzu has actually sold more than 75,000 homes on its site, more than 50% of which were bought by people who actually plan to live in the home. Zillow, which gets most of its revenue from advertising, cannot make such a claim. Are investors valuing Hubzu the way they value Zillow or Trulia? Not remotely. All of Altisource, including Hubzu, has a market cap of 4.75 times its revenue over the past 12 months, according to Bloomberg data. By contrast, Zillow's market cap is 20.2 times trailing 12-month revenues and Trulia's is 14.81. By this measure, Nationstar is the cheapest of all, with a market cap of just 2.49 times revenue. However, Nationstar only launched homesearch.com in May, and doesn't yet disclose any financial data about it.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV