Many more people seem to have found their homes through zillow.com but investors were left homeless with the latest results announcement from Zillow (Z) . The company reported earnings for the second quarter last evening after market close. The company did beat the analyst expectations for both revenue and earnings. Although revenues jumped 69% Y/Y, the margins dropped by 8% on account of increased marketing expenses and expenses of share compensation for a prior acquisition. This more than offset the increase in revenues. The company reported a good quarter in terms of increased number of monthly users (66% increase Y/Y) and sharp increase in revenues. However the earnings will have to keep pace in the coming quarters to justify the super-high valuation of the stock (above 4000x PE ratio before this quarter - refer Zillow stock chart). At the moment Zillow stock is not a stock we love.
Source: Zillow PE ratio chart by Amigobulls
Can Acquisitions Help Yahoo Stock
CEO Marissa Mayers shopping spree continued as Yahoo (YHOO) acquired Rockmelt, the social browser. Rockmelt was founded in 2009 as a social web browser that integrated Facebook, Twitter and IM-style chat. The financial terms of the deal were not disclosed, but analysts feel that Yahoo would be paying roughly between $60-70 million. The obvious question that arises in our mind as investors is, are these acquisitions going to help Yahoo stock in the mid to long-term? The positive side is that the ad revenue would increase once it charms users with these newly acquired products and technologies, but on the flip side the company is already spending quite heavily on such acquisitions and R&D expenditure. After Marissa’s arrival, the Yahoo stock price has ticked up by 70%.
Demandware Stock Is Up 6.4%
Demandware (DWRE) stock price gained 6.4% on account of winning a new contract. The company offers enterprise cloud platforms that provides e-commerce solutions to enterprises. Yesterday, Accenture and Demandware entered into a contract to provide Lacoste (manufacturer of clothing and other fashion wear) with a solution to establish its online presence in Greater China. The contract also states that Accenture’s new solution would use Demandware’s core digital commerce platform.
Source: Demandware stock price chart by Amigobulls
CoStar Group Stock Upgraded To A “Hold”
CoStar Group (CSGP), provider of information, analytics and marketing services to the commercial real estate industry in the US and UK, was recently upgraded by Thomson Reuters from a ‘sell’ rating to a ‘hold’. Prior to this, a few other analysts like SunTrust and Needham had raised the target price CoStar Group Stock of on solid grounds of 9 cents earnings beat. On an average, analysts anticipate that CoStar would post an earnings of $2.35 with a consensus price target of $130. The CoStar Group stock is currently trading at a high PE ratio of 264x.