• Wondering whether CoStar Group at around US$34.01 is starting to look like value or still has more room to fall or recover? This article breaks down what the current price might be implying about the stock.
• The stock has risen 6.4% over the last week, yet it remains down 15.1% over the last month and has declined 48.2% year to date and 54.0% over the past year, so recent trading has been choppy for long term holders.
• Recent coverage around CoStar Group has focused on how investors are reassessing higher growth real estate data and marketplace businesses in light of changing rate expectations and risk appetite. That backdrop helps explain why the stock has seen sharp short term moves even as its longer term return profile has been weak.
• CoStar Group currently has a valuation score of 3/6, so the stock screens as undervalued on half of the standard checks. The rest of this article will compare different valuation methods before finishing with a way to think about value that goes beyond the usual ratios and models.

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

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting its future cash flows and discounting them back to today in dollar terms. In this case, the model uses a 2 Stage Free Cash Flow to Equity approach.

CoStar Group is currently generating trailing twelve month free cash flow of about $59.5m. Analysts provide specific estimates for the next few years, then Simply Wall St extrapolates further. For example, projected free cash flow in 2026 is $510.5m and in 2028 is $944.7m, rising to about $1.9b by 2035 based on the provided projection path.

When these cash flows are discounted back, the model arrives at an estimated intrinsic value of $62.84 per share. Compared with the recent share price around $34.01, the DCF implies the stock trades at a 45.9% discount, which screens as materially undervalued using this method.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests CoStar Group is undervalued by 45.9%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: CoStar Group Price vs Sales

For companies that are still building up earnings, the P/S ratio is often a useful way to compare what investors are paying for each dollar of revenue, especially when profits are relatively small or volatile.

What counts as a “normal” or “fair” P/S ratio usually reflects how quickly investors expect revenue to grow and how comfortable they are with the risks. Higher growth and lower perceived risk often support a higher multiple, while slower growth or higher risk typically lead to a lower one.

CoStar Group currently trades on a P/S ratio of 4.07x. That is higher than both the Real Estate industry average of 2.54x and the peer group average of 1.49x. On this basis, the stock is pricing in stronger attributes than a typical peer based on revenue.

Simply Wall St’s Fair Ratio for CoStar Group is 4.25x. This is a proprietary estimate of what the P/S might be given the company’s growth profile, profit margins, industry, market cap and risk characteristics. Because it adjusts for these company specific factors, it can be more informative than a simple comparison with peers or the broad industry.

Comparing the current 4.07x P/S with the Fair Ratio of 4.25x indicates that the stock screens as slightly undervalued on this measure.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your CoStar Group Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives are introduced here as a simple way for you to attach a clear story about CoStar Group to the numbers, link that story to a forecast for revenue, earnings and margins, and then see a fair value that you can compare directly with today’s price on Simply Wall St’s Community page. Narratives for this stock already range from a more cautious view with a fair value around US$33 to a more optimistic view near US$70. These all update automatically as new news or earnings arrive, so you can quickly see whether your own fair value is above or below the current share price and decide how that lines up with your investment plans.

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.