NEW YORK (TheStreet) -- Zillow (Z) - Get Report shares are up 10.8% to $108.45 in trading on Friday as the company's merger with fellow real estate search engine Trulia (TRLA) is set to be approved by regulators, according to industry news service HousingWire.
Shareholders approved the deal last month but its finalization is contingent on passing FTC regulations.
The FTC has been reviewing the $2.9 billion acquisition proposal since late last year, but has delayed the consummation of the deal while it gathers further information about the two companies.
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The closing date for the deal was pushed back to February 15, after originally being pushed to February 1, as the FTC increased its scrutiny of the deal.
TheStreet Ratings team rates ZILLOW INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ZILLOW INC (Z) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Z's very impressive revenue growth greatly exceeded the industry average of 28.8%. Since the same quarter one year prior, revenues leaped by 66.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Z has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 7.26, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $4.48 million or 12.33% when compared to the same quarter last year. Despite an increase in cash flow, ZILLOW INC's cash flow growth rate is still lower than the industry average growth rate of 26.48%.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 1243.7% when compared to the same quarter one year ago, falling from -$1.19 million to -$15.98 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, ZILLOW INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: Z Ratings Report