On Tuesday, Zillow Inc (NASDAQ:Z) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Most people know Zillow Inc (NASDAQ:Z) best for its online home-value estimates, providing a gauge of how home prices have changed over time. Yet the company is working hard to go well beyond those free services to make the website a vital part of real-estate professionals’ business strategy. Let’s take an early look at what’s been happening with Zillow Inc (NASDAQ:Z) over the past quarter and what we’re likely to see in its quarterly report.
Stats on Zillow
|Analyst EPS Estimate||($0.03)|
|Revenue Estimate||$37.39 million|
|Change From Year-Ago Revenue||64%|
|Earnings Beats in Past 4 Quarters||4|
Will anything hold Zillow’s earnings back this quarter?
Somewhat surprisingly, analysts have dramatically reduced their views on Zillow’s earnings over the past several months. They’ve reversed initial calls for a modest profit in the first quarter, and they’ve slashed their full-year earnings estimates by a third. But the stock has ignored analysts’ concerns, pushing share prices up 70% since late January.
One thing that has stoked optimism for Zillow Inc (NASDAQ:Z) recently came when newly public rival Trulia Inc (NYSE:TRLA) posted extremely strong results late last month. As with many start-ups, Trulia Inc (NYSE:TRLA) lost more money than expected, but a near-doubling of revenue clearly reflects the upturn that we’ve seen in housing data over the past several months, and Trulia Inc (NYSE:TRLA)’s optimistic views of the current quarter bode well for Zillow Inc (NASDAQ:Z) as well.
But the key for Zillow to stay ahead of Trulia is to do everything it can to bolster its network effect. The company has been willing to sacrifice profits to bolster its advertising in an attempt to capture more subscriptions from real estate agents and mortgage-loan brokers as well as revenue from companies that want to advertise on Zillow Inc (NASDAQ:Z)’s website.