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2 Zillow Rivals Hidden Inside Solidly Profitable Companies

Stocks in this article: Z TRLA ASPS NSM MOVE

NEW YORK ( TheStreet) -- Even if you think online real estate companies like Zillow (Z - Get Report), Trulia (TRLA - Get Report) and Move (MOVE - Get Report) 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 - Get Report) and Nationstar Mortgage Holdings (NSM - Get Report). 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.

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