Zillow Inc Stock Downgraded (Z)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Zillow (Nasdaq: Z) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its premium valuation and weak operating cash flow.

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Highlights from the ratings report include:
  • Net operating cash flow has declined marginally to $5.44 million or 4.34% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ZILLOW INC has marginally lower results.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • Compared to other companies in the Real Estate Management & Development industry and the overall market on the basis of return on equity, ZILLOW INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for ZILLOW INC is currently very high, coming in at 90.00%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.30% trails the industry average.
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Zillow, Inc. engages in the operation of a real estate information marketplace in the United States. The company has a P/E ratio of 154, above the S&P 500 P/E ratio of 17.7. Zillow has a market cap of $678.3 million and is part of the services sector and diversified services industry. Shares are up 16.5% year to date as of the close of trading on Friday.

You can view the full Zillow Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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