Zillow Group Inc. Class A Common Stock (ZG)

FairStock Score: 36/100 — MIXED

Key Financials

Strengths

• Generates $85 million in annual free cash flow (0.8% yield on market cap)
• Conservative balance sheet with debt-to-equity of just 0.09, providing financial flexibility
• Altman Z-Score of 7.9 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 18.1% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($6) with negative 583% margin of safety—limited downside protection

AI Analysis

Zillow Group Inc. Class A Common Stock is a mid-cap communication services company valued at $10.5 billion. The business generates $2.6 billion in annual revenue with a 0.1% net margin and $85 million in free cash flow. From a quality standpoint, Zillow shows Altman Z-Score of 7.9 confirms fortress-level solvency and modest 0% ROE. On valuation, the stock is commanding a steep 494.4x multiple, with trades far above its Graham Number ($6) with no margin of safety. Growth dynamics show revenue growing at 18.1% and profit growth of 105.8%. Our composite FairStock Score of 36/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Zillow's 18% revenue growth trajectory could accelerate as it captures additional market share in the communication services sector. With $85 million in annual free cash flow (0.8% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 494x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer