Versus Competitors
Zillow’s primary competitors are Trulia Inc (NYSE:TRLA) and Move Inc. (NASDAQ:MOVE), which owns consumer real estate websites Realtor.com, Move.com and Moving.com.
Of these three companies, Move has been around the longest, going public in 1999 prior to the dot-com crash. Move Inc. (NASDAQ:MOVE) actually surged to over $400 per share before tumbling down to its current price of $10.
Zillow went public in July 2011, followed by Trulia in September 2012. That makes a direct comparison of these three peers difficult, given that Move has such a longer history than its rivals. However, we can still compare their fundamentals.
| Forward P/E | 5-year PEG | Price to Sales (ttm) | Price to Book | Debt to Equity | Return on Equity (ttm) | Profit Margin | |
| Zillow | 63.85 | 4.28 | 13.24 | 5.51 | No debt | 3.11% | 5.08% |
| Trulia | 37.84 | 1.34 | 10.91 | 8.58 | 11.55 | -24.39% | -16.04% |
| Move | 13.61 | 0.76 | 1.94 | 3.92 | No debt | 4.91% | 2.82% |
| Best Value | Move | Move | Move | Move | Zillow/Move | Move | Zillow |
Source: Yahoo Finance
On a fundamental basis, Move Inc. (NASDAQ:MOVE) is the cheapest. Despite its age, Move is also ‘moving’ with the times. It also offers dedicated mobile apps for iOS, Android and Windows Phones to compete with Zillow and Trulia.
Zillow looks fundamentally healthier than Trulia Inc (NYSE:TRLA), but its high forward valuation tells us that it needs to demonstrate some steep top and bottom line growth to justify its price. Unfortunately, the top and bottom line growth for all three companies is a completely mixed bag.
| Quarterly Revenue Growth(Y-O-Y) | Total Quarterly Revenue | Quarterly Earnings Growth(Y-O-Y) | |
| Zillow | +72.60% | $116.85 million | -40.60% |
| Trulia | +75.10% | $68.08 million | N/A |
| Move | +11.60% | $199.23 million | -60.10% |
Source: Yahoo Finance
From this chart, we can see that Move Inc. (NASDAQ:MOVE) is actually in some serious trouble. Although its quarterly revenue is still ahead of its peers, its growth is severely lagging. At this rate, Zillow’s total quarterly revenue will likely overtake Move’s by next year.
All three companies appear to have problems growing earnings – a classic problem that fast-growing Internet companies usually face – but Zillow’s fourth quarter earnings show that it is still capable of producing a profit – no matter how slim.
The Foolish Bottom Line
Zillow is poised in an enviable position – capitalizing on both the growth in the housing markets as well as the increased adoption of mobile technologies. The company’s robust revenue growth, growing visitor base, and widening presence on the web all make it a strong long-term investment. In the short term, however, the stock faces fundamental challenges – such as its high valuations and 5-year PEG ratio, which point to a possible slowdown next year. Still, investors should keep an eye on this stock – it could still be a long-term winner as it becomes the go-to site for housing searches in the United States.
The article Is Zillow Zooming Past its Competitors? originally appeared on Fool.com.
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