Value
6.8/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 0.0 |
| P/S | 8.4 |
| Fwd P/E | 9.2 |
| PEG | 7.5 |
| Analyst target | 9.0 |
- ▸Forward P/E: 10.8x
- ▸PEG: 0.92
ZG · Why this verdict
Why Zillow Group (ZG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Zillow Group's Class C shares trade at a 73% analyst upside with exceptional free cash flow conversion of 468%, but the stock is in a confirmed falling-knife technical breakdown with RSI at 33 and a -9.6% monthly moving average slope — making the timing of entry the critical risk.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
ZG shares show a confirmed death-cross breakdown with the 200-day moving average declining at -9.6% per 30 days, RSI at 33, a bearish MACD, and declining on-balance volume — all four major technical indicators pointing in the same bearish direction simultaneously. Momentum breakdown | The 200-day moving average slope returns to flat or positive within 9 months, and RSI rises above 45, indicating the downtrend has lost momentum. | Tripped↓Deteriorating |
| CounterRSI at 33 is approaching oversold territory where mean-reversion bounces frequently occur; short-term traders may generate a temporary relief rally that looks like a technical improvement but is not a durable reversal. | ||
ZG converts 468% of net income into free cash flow and holds a Piotroski F-Score of 8/9, demonstrating that the business generates substantially more cash than GAAP earnings reflect — a structural quality feature that argues the intrinsic value exceeds accounting metrics. Quality breakdown | Free cash flow conversion remains above 300% of net income for the next 4 quarters, confirming the cash generation advantage is structural rather than one-time. | →Stable |
| CounterExtremely high free-cash-flow conversion relative to net income can reflect low-quality earnings where accounting income is depressed by non-cash charges; if those charges reverse, the conversion ratio normalizes down sharply. | ||
Residential revenue accounts for 66% of total revenue, a high concentration flagged as a risk — any deterioration in the US residential real estate market directly impairs the majority of the company's revenue without diversification from other business lines. Bear case | Non-residential revenue sources grow to account for more than 40% of total revenue within 18 months. | ↑Improving |
| CounterResidential real estate is a large and relatively stable market long-term; the concentration risk is primarily cyclical rather than structural, and a market recovery would proportionately benefit ZG. | ||
A put-to-call ratio of 2.50, short interest of 16%, and implied volatility of 107% reflect extreme bearish institutional positioning — suggesting the market expects significant near-term downside or a binary event risk. Risk breakdown | Put-to-call ratio falls below 1.5 within 6 months, and short interest declines below 10%, indicating bearish positioning is unwinding. | ↑Improving |
| CounterExtreme put-to-call ratios and high short interest sometimes represent a contrarian buy signal when the stock reaches technical oversold conditions; the bearish positioning could amplify any recovery through forced short covering. | ||
ZG shares show a confirmed death-cross breakdown with the 200-day moving average declining at -9.6% per 30 days, RSI at 33, a bearish MACD, and declining on-balance volume — all four major technical indicators pointing in the same bearish direction simultaneously.
Tripped↓DeterioratingMomentum breakdown
- Expectation
- The 200-day moving average slope returns to flat or positive within 9 months, and RSI rises above 45, indicating the downtrend has lost momentum.
CounterRSI at 33 is approaching oversold territory where mean-reversion bounces frequently occur; short-term traders may generate a temporary relief rally that looks like a technical improvement but is not a durable reversal.
ZG converts 468% of net income into free cash flow and holds a Piotroski F-Score of 8/9, demonstrating that the business generates substantially more cash than GAAP earnings reflect — a structural quality feature that argues the intrinsic value exceeds accounting metrics.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 300% of net income for the next 4 quarters, confirming the cash generation advantage is structural rather than one-time.
CounterExtremely high free-cash-flow conversion relative to net income can reflect low-quality earnings where accounting income is depressed by non-cash charges; if those charges reverse, the conversion ratio normalizes down sharply.
Residential revenue accounts for 66% of total revenue, a high concentration flagged as a risk — any deterioration in the US residential real estate market directly impairs the majority of the company's revenue without diversification from other business lines.
↑ImprovingBear case
- Expectation
- Non-residential revenue sources grow to account for more than 40% of total revenue within 18 months.
CounterResidential real estate is a large and relatively stable market long-term; the concentration risk is primarily cyclical rather than structural, and a market recovery would proportionately benefit ZG.
A put-to-call ratio of 2.50, short interest of 16%, and implied volatility of 107% reflect extreme bearish institutional positioning — suggesting the market expects significant near-term downside or a binary event risk.
↑ImprovingRisk breakdown
- Expectation
- Put-to-call ratio falls below 1.5 within 6 months, and short interest declines below 10%, indicating bearish positioning is unwinding.
CounterExtreme put-to-call ratios and high short interest sometimes represent a contrarian buy signal when the stock reaches technical oversold conditions; the bearish positioning could amplify any recovery through forced short covering.
Per-dimension breakdown
Quality
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.4 |
| ROA | 0.1 |
| Gross margin | 10.0 |
| Op margin | 2.0 |
| Net margin | 1.1 |
| Current ratio | 7.9 |
| FCF quality | 10.0 |
| Moat | 7.9 |
| Rule of 40 | 5.5 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 468% FCF/NI
- ▸Wide economic moat
- ▸Strong Piotroski F-Score: 9/9
Growth
7.1/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 7.1 |
Momentum
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 2.3 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -12.2%/30d — confirmed downtrend
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.0 |
| Analyst rating | 7.5 |
| Price target | 10.0 |
- ▸Analyst upside: 97%
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $1,605,772 (0.021% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.6 |
| quality rank | 2.3 |
| growth rank | 7.6 |
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.7 |
| support resistance | 4.9 |
| 52w position | 0.0 |
| gap | 6.0 |
Risk (lower is worse)
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.3 |
| days to cover | 8.6 |
| volatility | 0.6 |
| beta | 3.5 |
| debt equity | 9.6 |
| news risk | 5.0 |
- ▸High short interest: 15%
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.2 |
| news activity | 8.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier -1 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=-1Passed (7)
- ASYMMETRY:8.1>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:15d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.8<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
8.14
Upside
+77.1%
Downside
9.5%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 52
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -65% (>40% off 52w high)
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: ASYMMETRY:8.1>=1.5. Top dim: Growth at 7.1; weakest: Momentum at 3.8. No conviction either direction.
The strongest dimensions are Growth at 7.1, Sentiment at 7.1, and Value at 6.8; the weakest are Momentum at 3.8, Technical at 4.2, and Peer rank at 4.2. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 8.14 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Falling Knife Confirmed DowntrendTripped
Trip ifPrice drops below $28, falling more than 14% below the current $32.68, while the 200-day MA slope remains below -7% per 30 days.
- P2468pct Free Cash Flow Conversion
Trip ifFree cash flow conversion drops below 150% of net income for 2 consecutive quarters.
- P3Residential Concentration Risk
Trip ifResidential revenue falls below 55% of total revenue only if absolute residential revenue also declines by more than 10% year-over-year.
- P4Extreme Bearish Options Positioning
Trip ifPut-to-call ratio rises above 3.0, exceeding the current 2.5 level, or short interest rises above 20%.