• If you are wondering whether CoStar Group's recent share price puts it in the bargain bin or still on the expensive side, you are in the right place for a closer look at value.
• The stock closed at US$48.94, with returns of 2.2% over 7 days, a 25.1% decline over 30 days, a 25.5% decline year to date, and a 38.2% decline over 1 year that may have changed how investors think about both risk and opportunity.
• Recent coverage has focused on CoStar Group's role as a key player in digital commercial real estate data and marketplaces, including how its platforms are used across property research and online listings. This context is important for understanding why investors might reassess what they are willing to pay for that position in the real estate technology space.
• Right now, CoStar Group scores 1 out of 6 on our valuation checks. Next, we will look at how different methods such as multiples and discounted cash flow frame that result, before finishing with a broader way to think about valuation beyond the headline numbers.

CoStar Group scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: CoStar Group Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model estimates what a business could be worth by projecting its future cash flows and then discounting those back to today using a required rate of return. It is essentially asking what all of CoStar Group’s future cash flows are worth in today’s dollars.

For CoStar Group, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month free cash flow is a loss of $60.2 million. Analysts have provided free cash flow estimates out to 2028, with Simply Wall St extrapolating beyond that to build a 10 year path, reaching projected free cash flow of about $1.9b in 2035 in nominal terms.

When all those projected cash flows are discounted back, the model arrives at an estimated intrinsic value of about $59.55 per share. Against the recent share price of $48.94, this implies the stock is 17.8% undervalued according to this DCF framework.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests CoStar Group is undervalued by 17.8%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Approach 2: CoStar Group Price vs Sales

For CoStar Group, the preferred metric is the P/S ratio, which can be useful when you want to focus on how the market values each dollar of revenue rather than earnings that can be affected by accounting items or short term swings in profitability.

In general, investors tend to accept a higher or lower P/S multiple based on what they expect for future revenue growth and how much risk they see in the business model. Higher growth and lower perceived risk can support a higher “normal” P/S, while slower growth or higher uncertainty usually pushes that “normal” level down.

CoStar Group currently trades on a P/S of 6.79x. That is above the Real Estate industry average of 2.67x and also above the peer average of 1.79x. Simply Wall St’s Fair Ratio for CoStar Group is 4.53x, which is a proprietary estimate of what a reasonable P/S might be after considering factors like earnings growth, industry, profit margin, market cap and specific risks.

Compared with simple peer or industry comparisons, the Fair Ratio aims to be more tailored because it recognises that companies with different growth, risk and margin profiles arguably deserve different multiples. With the current P/S of 6.79x sitting above the Fair Ratio of 4.53x, this framework points to CoStar Group trading on a richer valuation than that customised benchmark.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your CoStar Group Narrative

Earlier we mentioned that there is an even better way to think about valuation, and on Simply Wall St that comes through Narratives. On the Community page, you and other investors link a simple story about CoStar Group to a set of numbers like expected revenue, earnings, margins and a fair value. You can then compare that Fair Value to the current price and see, for example, how a more optimistic view with a Fair Value of US$105.00 and a more cautious view with a Fair Value of US$68.96 can both exist side by side. These values automatically update as new news or earnings arrive, so you can decide for yourself whether the current price fits your own CoStar Group Narrative.

Do you think there's more to the story for CoStar Group? Head over to our Community to see what others are saying!

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.