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Valens Equities Weekly Equity Idea Highlight for July 5, 2017 – Zillow Group, Inc.

July 5, 2017

This week the Valens Securities team highlights our most interesting equity insight from across our tools and our analysis.

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 8.4x UAFRS-based P/B (V/A’) though at the higher end of historical valuations with a 40.6x UAFRS-based P/B (V/E’). After the acquisition of Trulia, ZG has seen UAFRS-based ROA rise from 17% to 23%, which is projected to remain around 20% going forward. However, the market is expecting Adjusted ROA to fall to 16%, levels not seen since 2011, with Adjusted Asset Growth at the low end of historic growth rates.

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