Mortgage Rates Overview - Mortgage rates are trending lower ahead of an anticipated Federal Reserve rate cut, with the current 30-year mortgage rate at 6.16%, down 12 basis points since Friday [1] - The 15-year fixed interest rate has decreased by three basis points to 5.46% [1] Current Mortgage Rates - Current national average mortgage rates include: - 30-year fixed: 6.16% - 20-year fixed: 5.68% - 15-year fixed: 5.46% - 5/1 ARM: 6.65% - 7/1 ARM: 6.58% - 30-year VA: 5.78% - 15-year VA: 5.29% - 5/1 VA: 5.94% [4] Refinance Rates - Refinance rates are generally higher than purchase rates, with the current national average for 30-year fixed refinance at 6.20% [15] Impact of Federal Reserve Decisions - The trajectory of future mortgage rates is closely tied to the Federal Reserve's decisions, with a 96% chance predicted for a rate decrease at the upcoming meeting [13] - Mortgage rates have been falling since early September, but their reaction to a potential Fed rate cut remains uncertain [14] Long-term Outlook - Economists do not expect significant drops in mortgage rates before the end of 2025, with any potential decreases in 2026 likely to be modest [16][17]

Company Overview - Zillow is recognized as a household name with strong brand awareness, attracting over 240 million average monthly unique users across its apps and websites [1] Business Model - The company is developing a "housing super app" aimed at becoming a comprehensive platform for all things related to moving, including buying, selling, renting, and financing properties [1]

Company Overview - Zillow is recognized as a household name with strong brand awareness, attracting over 240 million average monthly unique users across its apps and websites [1] Business Model - The company is developing a "housing super app" aimed at becoming a comprehensive platform for all things related to moving, including buying, selling, renting, and financing properties [1]

Group 1 - Zillow and Berkshire Hathaway HomeServices have entered an agreement to provide U.S.-based agents access to Zillow Showcase, an AI-powered premium listing experience [1][2] - The partnership aims to equip agents with advanced technology and digital marketing tools to enhance their competitiveness in the real estate market [2][3] - Zillow Showcase listings are expected to expedite sales, with properties selling for 2% more and being more likely to go pending within the first 14 days on the market compared to non-Showcase listings [3][4] Group 2 - The Showcase product features an interactive design that includes high-resolution images and room-by-room photo organization, which increases exposure and engagement with potential buyers [3][4] - Continuous enhancements to Showcase, such as the introduction of SkyTour, aim to provide a more immersive home shopping experience [4] - Agents can access performance dashboards for their Showcase listings, allowing them to track data and analytics for better decision-making [4] Group 3 - Berkshire Hathaway HomeServices has approximately 45,000 real estate professionals and over 1,400 offices globally, completing more than USD 127.7 billion in real estate sales in 2024 [7][8]

Core Viewpoint - Zillow Group has faced significant challenges since the pandemic, including a sharp decline in stock value due to internal missteps and changing macroeconomic conditions, but recent improvements in fundamentals and technical indicators suggest a potential recovery [4][11][18]. Group 1: Stock Performance and Market Context - Zillow Group's stock price has fluctuated dramatically, ranging from $18 to $212, and is currently down nearly 50% from its 2021 high [5][4]. - The stock has shown recent momentum, increasing nearly 20% in the last three months and approaching its 2025 high of $85.29 [14][18]. - A Golden Cross technical signal has formed, indicating a potential bullish trend, similar to a previous occurrence that led to an 80% appreciation in six months [12][11]. Group 2: Company Challenges and Strategic Missteps - Zillow's iBuying program, Zillow Offers, launched in 2018, faced significant issues, including overpaying for homes and failing to adapt to local market conditions, leading to substantial losses [9][10]. - By Q3 2021, Zillow reported a $422 million loss from the Zillow Offers segment, prompting the shutdown of the program and layoffs [10][11]. Group 3: Recent Developments and Financial Performance - Zillow's Q2 2025 revenue reached $655 million, a 15% year-over-year increase, driven significantly by rental revenue, which grew 36% year-over-year [18][19]. - The company reported earnings per share of 40 cents, missing the analysts' estimate of 44 cents, but this was largely attributed to increased marketing expenses and strategic investments [19][18]. - Following the Q2 report, 10 research firms raised their price targets for Zillow, with a new consensus price estimate of $85.62, indicating a 7% upside from current prices [20][17].

Group 1 - The article discusses a positive outlook on Zillow Group (NASDAQ: ZG), with a recommendation to buy based on expectations of achieving FY 2029 EBITDA guidance [1] - The author emphasizes a fundamentals-based approach to value investing, focusing on companies with long-term durability and robust balance sheets rather than just low multiples [1] - There is a recognition of the risks involved in investing in successful companies, particularly the importance of valuation, while also noting that in some cases, the potential for growth may outweigh immediate price concerns [1]

Core Viewpoint - Federal Agricultural Mortgage (AGM) is currently positioned as a more attractive investment option compared to Zillow Group (ZG) based on various valuation metrics and earnings outlook [3][7]. Valuation Metrics - AGM has a forward P/E ratio of 10.18, significantly lower than ZG's forward P/E of 43.50, indicating that AGM may be undervalued [5]. - The PEG ratio for AGM is 0.93, while ZG's PEG ratio stands at 1.41, suggesting that AGM offers better value relative to its expected earnings growth [5]. - AGM's P/B ratio is 1.73, compared to ZG's P/B of 3.87, further highlighting AGM's relative undervaluation [6]. Earnings Outlook - AGM is exhibiting an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model, indicating a positive trend in earnings estimate revisions [3][7].

Core Insights - Zillow Group, Inc. reported mixed second-quarter 2025 results, with net income missing the Zacks Consensus Estimate but revenues exceeding expectations, driven by strong customer engagement and brand positioning in the residential real estate sector [1][2][3] Financial Performance - Net income for the quarter was $2 million or 1 cent per share, a significant improvement from a net loss of $17 million or 7 cents per share in the prior-year quarter, primarily due to solid top-line growth [2] - Quarterly revenues increased to $655 million from $572 million in the year-ago quarter, surpassing the Zacks Consensus Estimate of $647 million, with residential revenues rising 6% to $434 million [3][8] - The Mortgages segment generated $48 million in revenues, up from $34 million a year earlier, driven by a 48% increase in purchase loan origination [4] - Rental revenues surged 36% to $159 million, primarily due to a 56% year-over-year growth in multifamily revenues [4] Profitability Metrics - Gross profit for the quarter was $489 million, compared to $442 million in the prior-year quarter, reflecting healthy revenue growth across all segments [5] - Operating expenses rose to $500 million from $480 million in the prior-year quarter, while adjusted EBITDA increased to $155 million from $134 million a year ago, supported by higher revenues and cost discipline [5] Cash Flow and Liquidity - In the first half of 2025, Zillow generated $191 million in cash from operating activities, up from $135 million in the prior-year period, with $587 million in cash and cash equivalents as of June 30, 2025 [6] Future Outlook - For Q3 2025, Zillow expects total revenues in the range of $663-$673 million and total adjusted EBITDA between $150 million and $160 million, with Mortgages' revenues projected to grow approximately 20% year-over-year [9] - The company anticipates low to mid-teens revenue growth for 2025, with continued adjusted EBITDA margin expansion and positive GAAP net income forecasted [10]

Core Insights - Zillow Group reported $655 million in revenue for Q2 2025, a year-over-year increase of 14.5% [1] - The EPS for the same period was $0.40, slightly up from $0.39 a year ago, but below the consensus estimate of $0.44, resulting in a -9.09% EPS surprise [1] - The revenue exceeded the Zacks Consensus Estimate of $646.56 million by +1.31% [1] Financial Performance Metrics - Average Monthly Unique Users for mobile applications and websites were 243 million, slightly below the estimate of 243.97 million [4] - Total visits to mobile applications and websites reached 2.59 billion, surpassing the average estimate of 2.51 billion [4] - Revenue from Mortgages was $48 million, exceeding the average estimate of $44.39 million, representing a year-over-year increase of +41.2% [4] - Revenue from Residential properties was $434 million, slightly above the estimated $429.91 million, reflecting a +6.1% year-over-year change [4] - Revenue from Other sources was $14 million, compared to the average estimate of $13.79 million, marking a +16.7% year-over-year increase [4] - Revenue from Rentals was $159 million, in line with the average estimate of $159.51 million, showing a +35.9% year-over-year change [4] Stock Performance - Zillow's shares have returned +12.8% over the past month, outperforming the Zacks S&P 500 composite's +0.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Company Performance - Zillow Group reported quarterly earnings of $0.4 per share, missing the Zacks Consensus Estimate of $0.44 per share, representing an earnings surprise of -9.09% [1] - The company posted revenues of $655 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.31%, compared to year-ago revenues of $572 million [2] - Over the last four quarters, Zillow has surpassed consensus revenue estimates four times, but has only exceeded consensus EPS estimates once [2] Stock Movement and Outlook - Zillow shares have increased approximately 11.9% since the beginning of the year, outperforming the S&P 500's gain of 7.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.48 on revenues of $671.26 million, and for the current fiscal year, it is $1.76 on revenues of $2.57 billion [7] Industry Context - The Financial - Mortgage & Related Services industry, to which Zillow belongs, is currently in the bottom 9% of the Zacks industry rankings, indicating potential challenges ahead [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Zillow's stock performance [5] - The Zacks Rank for Zillow is currently 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6]