Zillow, Inc. (NASDAQ:Z)

BuffettJunior1 (97.59) Submitted: 9/25/2012 11:04:30 PM : Start Price: $40.90 Z Score: +22.75

The valuation on this stock is ridiculous! I see people saying it has a P/E of 444, when in fact the story is much worse than that. The company's true earnings (owner earnings) are negative, and have been like that for as many years as the financial statements go back. The company is in decent financial health at the moment, with about $70 million in cash (IPO money) versus $22 million in debt (off-balance sheet debt or… operating leases). For those of you saying it has no debt, you're wrong - operating leases are actual debt. The company has been growing at a high rate (revenue 2-year CAGR% = 97%), however, that growth is showing signs of slowing down significantly. This business also has no competitive advantage whatsoever. There is absolutely nothing about this company that tells me it deserves a $1.4 billion market cap. A more reasonable valuation would be a market cap of around $150 to $200 million ($4.80 to $6.50 per share), and even that is being generous. This stock should underperform the market significantly over the next few years. Advice to fellow fools: Buy the PUTS, ignore the stock!