Zillow Inc. (Z) is set to report FQ4 2013 earnings after the market closes on Wednesday, February 12th. Zillow is an online real estate database. Back in 2011, Zillow announced an exclusive partnership with Yahoo Real Estate creating the largest real-estate advertising business on the web. One of the services that Zillow provides is its Zestimates, estimates created for housing prices based on publicly available historical and regional data. Zillow has grown its revenue steadily in each quarter over the past year and this quarter Wall Street is expecting sales growth upwards of 63%. Here's how investors expect Zillow to report Wednesday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for Z to report 7c EPS and $56.13M revenue while the current Estimize.com consensus from Buy Side and Independent contributing analysts is 8c EPS and $57.23M revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Z to beat Wall Street's expectations on EPS and revenue.
Throughout the previous 6 quarters, the consensus from Estimize.com has been more accurate than Wall Street in forecasting Z's revenue every time and has been more accurate in forecasting EPS 3 times. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors, Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly, it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we are seeing a smaller differential than usual for Z.
This quarter analysts are expecting profit and revenue to be up compared to FQ4 2012. The distribution of estimates published by analysts on the Estimize.com platform range from 4c to 11c EPS and $55.00M to $59.16M in revenues. This quarter we're seeing an average distribution of estimates for Z compared to recent quarters.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.
Throughout the quarter the EPS consensus from Wall Street increased from 2c to 7c while the Estimize EPS consensus inched higher from 7c to 8c. Over the same time period Wall Street raised its revenue expectation from $54.46M to $56.13M while Estimize shot up from $56.43M to $57.23M. Timeliness is correlated with accuracy and rising analyst expectations at the end of a period are often a bullish indicator.
The analyst with the highest estimate confidence rating this quarter is dschorrnyc who projects 8c EPS and $58.20M in revenue. In the Winter 2014 season, dschorrnyc is yet to make an estimate and is ranked 1153rd overall among over 3,800 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, dschorrnyc is making a bullish call expecting Zillow to report in-line with the Estimize consensus on profit but exceed on sales.
Analysts are expecting Zillow to grow in 2014 especially considering the company's expansion into home rentals and home improvement data markets. The number of unique viewers on the site in December 2013 was up 50% from one year previously and the company's steadily growing revenue is a good sign for investors. This quarter contributing analysts on Estimize.com are expecting continued revenue growth and for Zillow to outperform Wall Street expectations by a small margin.
Disclosure: No positions