The provider of information, analytics and marketing services to the commercial real estate industry has a strong competitive position in an improving real estate market, analysts said.
"In our opinion, CoStar is an attractive investment as the commercial real estate market has steadily improved since the depth of the recession, and when combined with a strong competitive position, it provides consistent organic growth, consolidation opportunities, and margin expansion to drive earnings and cash flow growth above revenue growth," the firm said.
Shares of CoStar closed up 0.03% to $159.09 on Friday.
Separately, TheStreet Ratings team rates COSTAR GROUP INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate COSTAR GROUP INC (CSGP) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. 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, compelling growth in net income, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CSGP's revenue growth has slightly outpaced the industry average of 27.5%. Since the same quarter one year prior, revenues rose by 36.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although CSGP's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.37, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Internet Software & Services industry average. The net income increased by 17.2% when compared to the same quarter one year prior, going from $11.05 million to $12.96 million.
- COSTAR GROUP INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COSTAR GROUP INC increased its bottom line by earning $1.04 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($3.25 versus $1.04).
- The gross profit margin for COSTAR GROUP INC is currently very high, coming in at 81.49%. 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 8.46% trails the industry average.
- You can view the full analysis from the report here: CSGP Ratings Report