This week the Valens Securities team highlights our most interesting equity insight from across our tools and our analysis.
Zillow Group, Inc. (ZG): Pessimistic market outlook for growth and ROA’, controlling market position with huge addressable market opportunities and management confidence about their strategy spell equity upside
ZG is trading at the low end of historical valuations with a 7.6x V/A’ and a 20.1x V/E’. After the acquisition of Trulia, ZG has seen ROA’ rise from 20% to 32%, which it is projected to maintain going forward. However, the market is expecting ROA’ to fall to 20%, in line with historical pre-acquisition profitability levels, with Asset’ growth being reduced by half.