Zillow Group Inc. is scored 41 for moat and 40 for management. The management score rests on a return on invested capital of -0.5% and a gross margin of 74.1% — figures that describe returns closer to the cost of the capital behind them. Debt sits at 0.11x equity.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 9.7% a year, below the 10.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 19.4x. That produces an intrinsic value of $2.69, a 10-CAP price of $12.79 and a payback time price of $15.89, with the value zone set at the highest of the three, $15.89. Today's price of $27.75 is 75% above it.
The price is above the value zone and the business scores 41 for moat and 40 for management. Neither test argues for paying up here.
| Price | $27.75 |
| Market cap | $6.7B |
| P/E ratio | 125.6x |
| Return on invested capital | -0.5% |
| Gross margin | 74.1% |
| Debt to equity | 0.11x |
| Free cash flow yield | 1.4% |
| Growth rate used | 9.7% |
| Growth rate measured | 10.0% |
| Exit multiple assumed | 19.4x |
| Company | Moat | Buy price |
| Match Group Inc. (MTCH) | 61 | $53.45 |
| Pinterest Inc. (PINS) | 87 | $42.46 |
| Reddit Inc. (RDDT) | 81 | $79.77 |
| DoorDash (DASH) | 77 | $90.79 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Zillow Group Inc. rather than accepting ours.