CoStar Group

Methodology

CoStar's commercial real estate data business generates highly predictable earnings from subscription revenue with strong pricing power and retention. The company aggressively invests in new verticals (Homes.com) which temporarily depresses reported earnings. Fair value calculations should normalize for heavy investment spending that obscures underlying profitability power.

Methodology

CoStar trades at elevated PEG ratios reflecting premium valuations for its data monopoly in commercial real estate and network effects. Current investment spending in residential real estate expansion temporarily suppresses earnings growth. PEG appears expensive but doesn't capture the option value of Homes.com disrupting residential listings.

Methodology

CoStar doesn't pay dividends and reinvests aggressively into building competitive moats through data collection, marketing, and new product development. Management prioritizes long-term market dominance over near-term profitability. Total return depends on successful expansion into adjacent markets while maintaining commercial real estate data pricing power.