Zillow today released it’s Q2 earnings report, giving investors a peek into if younger generations were buying houses or avocado toast. It seems as if avocado toast might be winning this battle, not only because Zillow can’t seem to meet revenue estimates, but Calavo Growers ($CVGW) is up 29.59% this year.
Highlights from Zillows earnings call include:
- Q2 net loss of $3 million
- Revenue was up 21.9% year / year, but missed consensus by $0.4 million
- Zillow is buying a home mortgage lender to try and compete with companies like OpenDoor
- Q3 was guided lower across the board, with softer expectations for revenue and EBITDA
- Full FY guidance was given the boot as well, with revenue and EBITDA sent lower
Okay, how can I invest in Avocado toast
In an actual serious look, comparing Zillow to Calavo Growers, and using the same financial analysis model, avocados provide a better return than Zillow. Zillow shows a 5% upside to the share price, while Calavo Growers shows an 11% upside to the stock. We used a 5 Year Discounted Cash Flow revenue exit model.
Hate avocados? You can buy the Zillow dip
Investing in Zillow wouldn’t be a bad thing, as they do seem to be doing positive things at the company. They are still one of the top three online retailers of real estate, and seems to be able to hold this position. Zillow also trades at a decent multiple, and could show incredible growth if these bets pay off. If we look at a 5 YR Discounted Cash Flow EBITDA exit model, there’s a 33% upside potential for the stock, which bodes well for investors.
As for avocados, Calavo is still a decent investment. Strong growth and avocado prices staying steady, this public company was built almost entirely on the back of this good fat vegetable. They even pay out a .99% dividend. Not bad for a vegetable that has about a 10 second window between it being fresh and being rotten.