NEW YORK (TheStreet) -- Shares of Zillow Group (Z) - Get Report are gaining by 2.06% to $93.54 in late morning trading on Wednesday. On Tuesday the web-based real estate and home related brands offering platform said it is expecting its fiscal 2015 revenue will be about $690 million versus the $750 million analysts had forecast.
The company gave the revenue update during an investor call yesterday. Speaking to TheStreet's Jim Cramer on CNBC's 'Mad Money', Zillow CEO Spencer Rascoff said the company wanted to issue an operating update since it had been eight weeks since the closing of the Zillow's Trulia (TRLA) deal and "we had a lot of news to share."
Last July, Zillow signed a $2.5 billion agreement to purchase the online residential real estate site Trulia, but the closing of the deal had been delayed due to scrutiny from antitrust regulators.
"Zillow intends to end up capturing the lion's share of the $13 billion in real estate related advertising. We are just trending a couple of quarters behind; 2015 is going to be a transition year, and the long-term story of 2016 and beyond is still very bright," Rascoff told Cramer, CNBC.com reports.
When Zillow announced the deal last summer, it estimated that it would result in $100 million in annual cost savings and avoidances, CNBC.com said, adding that Rascoff assured investors that Zillow is still on track.
Additionally, analysts at SunTrust lowered their price target on Zillow to $110 from $115 due to the company's revenue guidance. The firm maintained its 'neutral' rating on the stock.
Separately, TheStreet Ratings team rates ZILLOW GROUP INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ZILLOW GROUP 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 weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Z's very impressive revenue growth greatly exceeded the industry average of 18.9%. Since the same quarter one year prior, revenues leaped by 58.2%. 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 7.95, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for ZILLOW GROUP INC is currently very high, coming in at 92.11%. Regardless of Z's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, Z's net profit margin of -11.80% significantly underperformed when compared to the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, ZILLOW GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $12.16 million or 35.17% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: Z Ratings Report