Zillow Group (ZG) Could Be 44% Below Fair Value After Earnings Beat And Lawsuit Resolution

Why Zillow Group Stock Is Back in Focus

Zillow Group (ZG) is in the spotlight after resolving a rental listings lawsuit tied to its Redfin partnership and reporting second quarter 2026 results that exceeded earnings and revenue expectations.

The company also issued guidance for the third quarter, with revenue of US$745 million to US$760 million and adjusted EBITDA of US$180 million to US$200 million. Management highlighted projected growth in mortgages and rentals, while residential revenue is expected to be flat.

Despite the latest legal resolution and earnings beat, Zillow Group’s share price has fallen 46.17% year to date and the 1 year total shareholder return is down 58.34%, although a 4.04% 1 month share price gain hints at stabilising momentum after a softer recent week.

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Zillow Group now has a clearer legal backdrop and solid recent results, yet the stock is still well below where it traded a year ago. Is a strong real estate platform currently priced as a bargain, or fairly?

Most Popular Narrative: 43.8% Undervalued

The most followed narrative pegs Zillow Group’s fair value at $62.86 compared with a last close of $35.32, putting a big gap between market price and narrative assumptions.

The shift toward integrated, end to end digital transaction ecosystems (like Zillow 360 and Enhanced Markets) is enabling Zillow to capture more ancillary services revenue (mortgages, rentals, software), reducing dependence on advertising and expanding top line growth as well as supporting EBITDA margin expansion through operational efficiencies.

Read the complete narrative.

Want to see what kind of revenue mix, margin profile, and earnings curve that vision implies? The narrative leans heavily on compounding profits and richer monetization.

Result: Fair Value of $62.86 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Zillow Group’s story also carries clear pressure points, including legal challenges around its Redfin agreement and growing competition from Google’s real estate ad products.

Find out about the key risks to this Zillow Group narrative.

Another View on Zillow Group’s Valuation

The most popular Zillow Group narrative leans on a discounted cash flow view that points to upside. Yet on simple earnings multiples the picture looks very different. The stock trades on a P/E of 144.4x, compared with a fair ratio of 48.6x, the peer average of 82.3x, and a US Real Estate industry average of 17x.

For you as an investor, that gap means the market is already baking in a lot of future success, which can raise the risk of disappointment if progress is slower or more uneven than expected. With such a wide spread between DCF upside and earnings-based pricing, which signal do you trust more right now?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If the mixed signals around Zillow Group leave you undecided, take a moment to review the full picture for yourself using the 3 key rewards and 1 important warning sign.

Looking For More Investment Ideas Beyond Zillow Group?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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