Why Zillow (Z) Stock Is Gaining Today

NEW YORK (TheStreet) -- Zillow (Z) was gaining 4.2% to $94.86 Monday after the company reported an increase in monthly unique users in March.

The online real estate information provider reported that monthly unique users increased to 76.55 million in March 2014, up from 65.56 million in February and 50.3 million in March 2013.

Earlier in April Zillow announced a partnership with Beijing Yisheng Leju Information Services to provide real estate listings for the Chinese company. The partnership would give Chinese citizens and investors better access to the U.S. housing market.

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TheStreet Ratings team rates ZILLOW INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ZILLOW INC (Z) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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.
  • ZILLOW INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ZILLOW INC swung to a loss, reporting -$0.38 versus $0.19 in the prior year. This year, the market expects an improvement in earnings ($0.03 versus -$0.38).
  • The gross profit margin for ZILLOW INC is currently very high, coming in at 93.44%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, Z's net profit margin of 4.65% significantly trails the industry average.
  • Net operating cash flow has significantly increased by 91.48% to $18.76 million when compared to the same quarter last year. In addition, ZILLOW INC has also vastly surpassed the industry average cash flow growth rate of 11.60%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 394.5% when compared to the same quarter one year prior, rising from $0.55 million to $2.72 million.
  • You can view the full analysis from the report here: Z Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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