Why Zillow (Z) Stock Is Up in After-Hours Trading

NEW YORK (TheStreet) -- Zillow  (Z) rose in after-hours trading on Wednesday after the online real estate database beat analysts' estimates in its first-quarter results.

Zillow reported net loss of $6.3 million, or 16 cents a share, compared to a loss of $3.7 million, or 11 cents a share, in the same period one year earlier. Adjusted basic and diluted net income was 2 cents a share, compared to 1 cent a share in the same quarter one year earlier. The loss widened due increased advertising spending in order to draw more visitors to the site.

The company also reported record quarterly revenue of $66.2 million, up 70% year over year from $39 million.

Analysts had expected a loss of 8 cents a share on revenue of $63.3 million.

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Zillow also noted record quarterly and all-time traffic and set a record with almost 79 million monthly unique users on mobile and Web in April 2014. This marked a 50% year-over-year increase.

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Separately, 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 22.53%.
  • 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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