Valuation -- 5/10
Zillow trades at ~3.1x EV/2026E revenue vs CoStar at ~4.5x, a meaningful discount reflecting
macro uncertainty around housing transaction volumes and mortgage rates. The forward P/E of ~18x
on consensus 2026E EPS of $2.21 is not demanding if estimates hold, but those estimates assume
mid-teens revenue growth and margin expansion that require housing volume recovery -- a factor
outside management control. Down 57% from the $93.88 high, near 52-week lows at $40.60.
The $1.3B buyback (~14% of market cap) provides a floor, and rentals growth offers visibility,
but the path to re-rating requires external macro cooperation.
Weight: 15%
Forward P/E (2026E)
~18x
on consensus $2.21 EPS
EV/2026E Revenue
3.1x
vs CoStar 4.5x (31% discount)
Drawdown from Highs
-57%
$40.60 vs $93.88 high
Buyback Authorization
$1.3B
~14% of market cap (Mar 2026)
Peer valuation comparison
| Company | Price | Mkt Cap | EV/2025 Rev | EV/2026E Rev | Fwd P/E | 2025A Rev |
|---|---|---|---|---|---|---|
| Zillow Group (Z) | $40.60 | ~$9.3B | 3.6x | 3.1x | ~18x | $2.58B |
| CoStar Group (CSGP) | ~$40 | ~$17B | 5.7x | 4.5x | N/M | ~$3.0B |
| Redfin (RDFN) | ~$11.19 | ~$1.4B | 1.4x | 1.3x | N/M | ~$1.03B |
| Key Takeaway | Zillow trades at a meaningful discount to CoStar on EV/Revenue (3.1x vs 4.5x) despite higher EBITDA margins and a stronger moat in residential traffic (200M+ monthly uniques). The ~18x forward P/E is reasonable if 2026E estimates hold, but consensus assumes mid-teens revenue growth and housing volume recovery. CoStar commands a premium as it invests aggressively in Homes.com; Redfin trades cheaply but remains unprofitable. | |||||
Peer multiples are approximate and based on consensus estimates. Data as of April 2026.
Data sourced from Daloopa and public filings.
Historical financials (quarterly)
| Metric ($M) | Q1 24 | Q2 24 | Q3 24 | Q4 24 | Q1 25 | Q2 25 | Q3 25 | Q4 25 | FY24 | FY25 |
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 529 | 572 | 581 | 554 | 598 | 655 | 676 | 654 | 2,236 | 2,583 |
| Adj. EBITDA | 125 | 134 | 127 | 112 | 153 | 155 | 165 | 149 | 498 | 622 |
| GAAP Net Inc. | (23) | (17) | (20) | (52) | 8 | 2 | 10 | 3 | (112) | 23 |
| CFO (cum. YTD) | 80 | 135 | 306 | 428 | 104 | 191 | 296 | 368 | 428 | 368 |
Q4 2025 segment mix: Residential $418M, Rentals $168M, Mortgages $57M, Other $11M.
FY2025 revenue +15.5% YoY. Adj. EBITDA +24.9% YoY. GAAP turned profitable ($23M vs -$112M).
Data sourced from Daloopa.
Key catalysts (2026-2027)
| # | Catalyst | Timing | Prob. | Detail |
|---|---|---|---|---|
| C1 | Housing transaction recovery | H2 2026+ | 40% | NAR forecasts +14% existing home sales in 2026. Feb 2026 at 4.09M SAAR. If rates drift to 5.5-6.0%, volumes could inflect meaningfully, driving Premier Agent spend and mortgage originations. |
| C2 | Enhanced Markets scaling to 75% | 2-3 years | 55% | Currently ~44% of connections. Each incremental point drives higher take-rate per transaction and pulls ZHL mortgage attach through. |
| C3 | Rentals sustaining 30%+ growth | 2026 | 70% | Rentals grew +39% YoY to $630M in FY2025. Management guides ~30% for 2026, implying ~$820M. Most visible, recurring revenue stream. |
| C4 | ZHL mortgage origination ramp | 2026-2027 | 45% | Mortgage revenue +37% to $199M in FY2025. ZHL integration with Enhanced Markets creates structural pull-through at scale. |
| C5 | $1.3B share buyback | 2026-2027 | 80% | Announced March 2026. ~14% of market cap at $40.60. Signals management confidence, provides floor under shares. |
| C6 | Showcase / Zillow Pro adoption | H2 2026 | 50% | AI-powered virtual staging, Showcase listings, and Zillow Pro (agent subscription). Incremental monetization vectors, early days. |
| C7 | Mortgage rates decline sub-6% | 2026-2027 | 30% | Currently ~6.5%. Every 50bps decline materially improves affordability and transaction velocity. Single most impactful exogenous catalyst. |
Key risks (bear case)
| # | Risk | Severity | Detail |
|---|---|---|---|
| R1 | Elevated mortgage rates (>6.5%) | HIGH | Tariff-driven inflation or sticky services inflation could keep rates elevated. 80%+ of existing mortgages below 5% creates rate lock-in. A 50bps spike could erase projected home sales gains. |
| R2 | RESPA/RICO class-action litigation | HIGH | Taylor/Armstrong v. Zillow alleges buyer steering toward ZHL and Premier Agent partners. Judge paused discovery pending MTD (March 2026). If class certification succeeds, potential damages are multi-billion. |
| R3 | Housing recession / macro downturn | V. HIGH | Tariff escalation and stagflation risk could push sales below 4M SAAR. Revenue overwhelmingly tied to housing transaction velocity. A 10% volume decline would pressure growth targets. |
| R4 | NAR/DOJ regulatory overhang | MEDIUM | DOJ retains authority for additional MLS-level actions. Further commission compression (post-2024 settlement) could reduce agent ad spend pool funding Premier Agent revenue. |
| R5 | CoStar/Homes.com competition | MEDIUM | CoStar investing $3B+ war chest in Homes.com with aggressive TV advertising and agent tools. Could erode market share among listing agents at the margin. |
| R6 | Enhanced Markets execution risk | MED-HIGH | Shift from impression-based to transaction-integrated model changes agent value proposition. Agent adoption friction, RESPA constraints on ZHL integration, and local market dynamics could slow the 44% to 75% ramp. |
| R7 | SBC dilution / GAAP profitability gap | MEDIUM | FY2025 Adj. EBITDA $622M vs GAAP net income $23M -- ~$600M gap from SBC and non-cash charges. Buyback helps but does not fully offset SBC-driven dilution. |
| R8 | Tariff impact on new construction | LOW-MED | Tariffs could reduce new construction by 450K units over 5 years, adding ~$17,500/unit. Constrains supply but further depresses transaction volume -- net negative for volume-dependent model. |
Housing market macro dashboard
| Indicator | Current | Trend | Impact on Z |
|---|---|---|---|
| Existing Home Sales (SAAR) | 4.09M (Feb 26) | Flat | Neutral-Negative; well below 5M+ normalized |
| 30-yr Mortgage Rate | ~6.5% | Volatile | Negative; rate lock-in persists |
| Median Home Price | $398K (Feb 26) | +4% YoY | Mixed; supports rev/txn but hurts affordability |
| Housing Inventory | 3.8 months | Improving | Positive; more listings = more activity |
| NAR 2026 Forecast | +14% sales | Optimistic | Positive if achieved; first real recovery since 2021 |
| Zillow Own Forecast | +4.4% sales | Cautious | More realistic than NAR; underscores macro sensitivity |
Scenario analysis
| Scenario | Implied Score | Key Assumptions | Revenue | EBITDA |
|---|---|---|---|---|
| Bull | 7-8 | Rates to 5.5-6.0%, sales to 4.5M+ SAAR, Enhanced Markets past 60%, rentals 30%+ growth, RESPA dismissed, buyback compresses float | $3.0B+ | $750M+ |
| Base (assigned) | 5 | Rates 6.0-6.5%, housing at 4.0-4.2M SAAR, ~15% rev growth from rentals/EM, residential constrained, RESPA overhang persists | ~$3.0B | ~$680M |
| Bear | 2-3 | Rates above 7%, recession pushes housing below 3.8M SAAR, RESPA class cert with material damages, CoStar gains traction | HSD growth | Compresses |
Bear case implies $25-30 stock price. Bull case implies ~12x EBITDA, meaningful upside from $40.60.
Score rationale
Score of 5/10 reflects a balanced but cautious risk/reward at $40.60, near 52-week lows and down 57% from highs. The valuation discount to peers is real, but the dominant driver -- housing transaction volume -- is macro-dependent and outside management control.
Why not higher (6-7): Despite the ~31% EV/Revenue discount to CoStar and a reasonable ~18x forward P/E, the consensus estimates bake in mid-teens revenue growth that requires housing volume recovery. Existing home sales remain stuck at ~4.1M SAAR, well below 5M+ normalized levels. The RESPA/RICO class-action creates an unquantified multi-billion dollar tail risk. Mortgage rates at ~6.5% with 80%+ of mortgages locked below 5% create a structural headwind. GAAP profitability is thin ($23M) relative to Adj. EBITDA ($622M), reflecting ~$600M in SBC. CFO declined from $428M to $368M despite revenue growth.
Why not lower (3-4): The buyback ($1.3B, ~14% of market cap) is a credible capital return signal and provides a floor. Rentals at $630M growing 30%+ is the most visible and least macro-dependent revenue stream. Enhanced Markets (44% and scaling) structurally improves unit economics. FY2025 showed +15.5% revenue growth, +24.9% EBITDA growth, and the GAAP swing from -$112M to +$23M. Traffic moat of 200M+ monthly uniques is dominant and widening vs. Homes.com. The 57% drawdown prices in significant pessimism.
Net assessment: Zillow is a hold / accumulate-on-weakness position. The setup requires patience and macro cooperation. Monitor mortgage rate trajectory and existing home sales SAAR as the two swing factors for re-rating.
Data sourced from Daloopa and public filings. Analysis as of April 2026.