Should you invest in Zillow as the CEO comments on price acceleration?

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Updated on Aug 13, 2024

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Zillow’s CEO said the company’s current stock price does not reflect its proper performance.
Although the current price is relatively high, he said eventually, the performance will match the value.
Zillow stock surged nearly 4% on Monday, as it continued to recover from this year’s decline.

Zillow Group Inc. (NASDAQ:ZG) CEO and co-founder Rich Barton says that the company’s stock price appreciation over the last 12 months is not a true reflection of the business performance. However, he expects performance to catch up with pricing in the future. The stock gained nearly 4% on Monday.

Is Zillow fairly valued?

Zillow stock currently trades at a P/E ratio of 683.68, indicating a potential case of overvaluation. In addition, the forward P/E ratio of 81.70 is also significantly high. However, looking at the company’s expected earnings growth over the next five years could justify the valuation.

Analysts expect the company to post an average earnings growth of about 57% annually through the fiscal year 2026. As a result, investors are willing to pay a hefty premium for the stock ahead of the expected growth.

Technical overview: the rebound seems poised to continue

Zillow shares appear poised to continue gaining in the coming days as investors bet on its future growth. In addition, the stock is yet to hit overbought conditions, thereby leaving some room to run.

Investors can target profits at approximately $145.65. The key support level is $108.18.

Bottom line: Zillow performance will catch up with pricing

Zillow stock seems poised to continue gaining as earrings grow. But the CEO is right; there is a lot of room for the stock price to run, given the expected growth for the next five years.