CSGP Stock Study (11-14-25)

Posted by Mark on March 27, 2025 at 08:22 | Last modified: November 14, 2025 10:39

I recently did a stock study on CoStar Group (CSGP, $68.53).

Value Line (VL) writes:

     > CoStar Group, Inc., founded in 1987, is a leading provider of commercial
     > and residential real estate information, analytics, online marketplaces,
     > and 3D digital twin technology. Web properties include Homes.com, the
     > second-largest real estate marketplace in the U.S. by traffic; LoopNet,
     > the most heavily trafficked commercial real estate marketplace on the
     > Web; as well as the apartment resource site Apartments.com.

Since 2016, the medium-sized company has grown sales and earnings at annualized rates of 16.3% and 7.5%, respectively (2015 excluded from full analysis as -$0.01/share EPS mathematically inflates growth rate to 49.1%). Through ’23, lines are mostly up, straight, and parallel except for EPS dips in ’20 (large) and ’23. While sales grows every single year, ’24 EPS decreases 63% YOY and results in an overall visual inspection that—I dare say—fails.

Google AI writes:

     > CSGP’s earnings per share (EPS) was down sharply in 2024 primarily
     > due to a significant increase in aggressive investments in product
     > development and expansion, particularly for its Homes.com initiative,
     > which outstripped revenue growth in the near term… while CSGP
     > reported robust revenue growth of 11% for the full year 2024, the
     > heavy operating costs associated with its expansion efforts led to a
     > decrease in operating margins and pressure on its net income and EPS.

Not surprisingly, 5- (9-) year EPS R^2 is 0.12 (0.18) and VL scores Earnings Predictability at 50. I am pursuing the study regardless because of my fascination with growth rates (see below).

Since 2016, PTPM leads peer and industry averages despite falling from 16.3% to 7.7% (’24) with a last-5-year mean of 17.5%. ROE leads peers but trails the industry while falling from 5.3% to 1.9% (’24) with a last-5-year mean of 4.5%. Debt-to-Capital is much less than peer and industry averages while falling from 17.0% to 13.2% with a last-5-year mean of 14.8%.

Quick Ratio is 2.83 and Interest Coverage is “well in the double digits” per M* who assigns “Wide” Economic Moat, gives “Exemplary” rating for Capital Allocation, and gives a Financial Health grade of A (per BI website). VL gives a B++ rating for Financial Strength.

With regard to sales growth:

• YF projects YOY 18.4% and 18.1% for ’25 and ’26, respectively (based on 19 analysts).
• Zacks projects YOY 18.4% and 18.3% for ’25 and ’26, respectively (3 analysts).
• VL projects 18.9% annualized growth from ’24-’29.
• CFRA projects 18.3% YOY and 17.4% per year for ’25 and ’24-’26, respectively.
• M* gives ACE 2-year growth of 19.2% and projects 12.5%/year x10 years (per analyst note).

My 12.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch projects 44.0% and 46.1% per year for ’24-’26 and ’24-’27, respectively (based on 20 analysts).
• Nasdaq.com projects 127% YOY and 86.3% per year for ’26 and ’25-’27 (3 / 3 / 3 analysts for ’25 / ’26 / ’27).
• Seeking Alpha projects 4-year annualized growth of 41.9%.
• Finviz gives ACE 5-year annualized growth of 35.1% (10).
• LSEG estimates LTG at 42.8%.
• YF projects YOY 15.2% and 71.4% for ’25 and ’26, respectively (17).
• Zacks projects YOY 18.3% and 72.6% for ’25 and ’26 (4), along with 5-year annualized growth of 41.8%.
• VL projects annualized growth of 32.7% from ’24-’29.
• CFRA projects 13.7% YOY and 39.0% per year for ’25 and ’24-’26 along with 3-year CAGR of 8.0%.
• M* gives ACE long-term growth of 50.1% (24.9% per analyst note assuming $1.50 non-GAAP EPS in ’26).

My 32.0% forecast is below the long-term-estimate range (mean of six: 40.7%). Initial value is ’24 EPS of $0.34/share rather than 2025 Q3 $0.05 (TTM).

My Forecast High P/E is 68.0. Since 2016, high P/E increases from 85.8 to 295 (’24) with a last-5-year mean of 157 and last-5-year-mean average P/E of 129. I am below the range (68.6 in ’18) and way above my comfort zone but this situation is unique (perhaps nonsensical).

My Forecast Low P/E is 37.0. Since 2016, low P/E increases from 55.9 to 201 (’24) with a last-5-year mean of 102. I am forecasting below the range (37.8 in ’19).

My Low Stock Price Forecast is $48.00. Default ($12.60) based on initial value given above is unreasonably low at 81.6% (80.3%) less than previous closing price (52-week low). My [arbitrary] projection is 30.0% and 24.8% less, respectively.

These inputs land CSGP in the HOLD zone with a U/D ratio of 1.2. Total Annualized Return (TAR) is 6.2%.

PAR (using Forecast Average–not High–P/E) of 0.8% is unthinkable for an investment prospect. If a healthy margin of safety (MOS) anchors the study, then I can focus on TAR instead but even that is below what I like to see in a medium-size company.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). I’m not surprised to see MS, currently, is just me.

My forecast high price is $92.50: much lower than VL’s $180.00. VL projects a future average annual P/E of 50.0 and high EPS of $3.00/share (versus my $1.36). That equates to a stock price of $150, which is halfway between its $120-$180 range.

I think MOS is robust in this study because my inputs are near or below historical/analyst averages/ranges.

With regard to valuation, PEG is 2.0 and 33 per Zacks and my projected P/E (low initial value): both overvalued (albeit massively conflicting). Relative Value [(current P/E) / 5-year-mean average P/E] is richest I have ever seen at 8.7. “Quick and dirty DCF” and M* have stock undervalued by 49% and 16%, respectively, while CFRA has it overvalued by 50%.

The overall analyst consensus is bullish. M* and CFRA rate the stock 4 stars and BUY, respectively. Analyst 12-month stock projections are up 2%, 43%, and 53% for low, medium, and high averages, respectively. VL is also quite bullish despite just lowering to its worst (5) Timeliness rating.

Who really knows?

Moral to the story: don’t bother studying stocks unless they are up, straight, and parallel.

Per U/D, CSGP is a BUY under $59/share. BI TAR criterion is met [92.5 / ((14.87 / 100 ) +1 ) ^ 5] ~ $46 given a forecast high price ~$93 (no dividend).

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