COSTAR GROUP, INC. (CSGP): what the price assumes
In the published model solve dated 2026-Q2, anchored at $32.04, COSTAR GROUP, INC. (CSGP) is priced for +17.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.
Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/CSGP
Headline
| Field | Value |
|---|---|
| Ticker | CSGP |
| Company | COSTAR GROUP, INC. |
| Sector / Industry | Consumer Cyclical |
| Current price | $32.04/sh |
| Composition | CoStar 39% / LoopNet 10% / Other Commercial Real Estate 7% / Residential Real Estate 45% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 4.8% |
| Operating margin (mid-cycle) | 17.7% |
| Margin compression (value-band) | -12.9pp |
| Trailing margin (depressed year) | 2.2% |
| Implied growth | 17.1% |
| Multiple paid | 20x mid-cycle operating income |
The operating-margin figure is value-band context at year 9: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 9.4% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: n/a
| Reference | Value |
|---|---|
| vs own history | +0.27σ |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 16.35x | 3 | expensive |
| Earnings | 7.09x | 5 | expensive |
| Relative | 8.81x | 2 | expensive |
| Growth | 0.80x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.6%); the inversion above states its own rate.
Per-Model Detail (n=13)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $42.78 | 0.75x | yes | FCF base $0.5B, growth 22% (input: historical growth), terminal g 4.0%, WACC 8.6%, 6yr projection |
| DCF Exit Multiple | Growth | $40.18 | 0.80x | yes | Exit EV/EBITDA: 78.9x / 80.9x / 82.9x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | — | — | no | P/E 44x (blended: static sector reference 20x + trailing (TTM) 176x), scenarios: 35.8x / 44.0x / 52.2x (bear / base = reference held flat / bull), EV/EBITDA 30.8x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $1.96 | 16.35x | yes | BV/sh $19.58, ROE (TTM) 0.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $1.03 | 31.11x | yes | 5yr excess ROE then converge to ke=9.3% (excluded from median) |
| Discounted Future Market Cap | Growth | $38.03 | 0.84x | yes | Rev $3.6B, growth 22% (input: historical growth; tapered), Terminal P/S: 3.0x / 3.7x / 4.3x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $2.40 | 13.35x | yes | EPS $0.20, growth 2% (input: historical EPS growth), PEG=88.19 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $4.52 | 7.09x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.20B × (1−26%) / WACC 8.6% → EPV (no growth) |
| Residual Income | Asset | $0.74 | 43.30x | yes | BV $19.58 + 5yr PV of (ROE (TTM) 0.9% − Kₑ 9.3%) × BV; BV grows 0.6%/yr (excluded from median) |
| Graham Number | Asset | $9.39 | 3.41x | yes | √(22.5 × EPS $0.20 × BVPS $19.58) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.16B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $7.75 | 4.13x | yes | FCF $280.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $2.63 | 12.18x | yes | SBC-adj FCF $0.09B (FCF $0.28B − SBC $0.19B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $6.45 | 4.97x | yes | EPS $0.20 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $1.65 | 19.42x | yes | BV $19.58 × (ROIC 0.7% / WACC 8.6%) |
| P/Sales Sector | Relative | — | — | no | Revenue $3.56B × sector P/S 1.5x |
| PEG Fair Value | Relative | $7.50 | 4.27x | yes | EPS $0.20 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $2.16 | 14.83x | yes | EPS $0.20 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Commercial Real Estate | operating | enterprise | $1.8b | — | withheld | unresolved no unit value |
| Residential Real Estate | operating | enterprise | $1.5b | — | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net cash | $257.0m |
| Net debt / NOPAT (after-tax) | -0.55x (net cash) |
| Net debt / operating income (pre-tax) | -0.41x (net cash) |
| Interest coverage | 22.5x |
| Share count CAGR (dilution) | 0.6% |
| Burning cash | no |
Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 17.7%); the trailing year was depressed.
Bullet Takeaways
- Two businesses sit inside one ticker: a commercial property data franchise that produced 1,787 million dollars of revenue in 2025, up from 1,443 million two years earlier, and a residential marketplace of similar size that lost money at the segment level.
- Almost all of the revenue is contracted, and the filing puts it precisely: Revenues from subscription-based contracts are approximately 93% of total revenues for the current year, though the share written on terms of a year or more has slipped over three years.
- The report lands on July 28, 2026, and the number that decides the year is the residential segment loss rather than consolidated revenue growth.
Bull Case
The advantage here is easy to miss because it looks like a software business and behaves like a toll road. CoStar sells research nobody else has bothered to assemble: field researchers walking buildings, verifying leases, photographing space, then licensing the result back to the industry that generated it. The filing describes contracts that generally renew automatically, a majority of which have a term of at least one year, and states that Revenues from subscription-based contracts are approximately 93% of total revenues for the current year. Ninety-three percent contracted is not a software metric. It is closer to a utility bill.
The commercial side has kept compounding through a genuinely bad stretch for its customers. Commercial Real Estate revenue went from 1,443 million dollars in 2023 to 1,515 million in 2024 to 1,787 million in 2025, which is growth accelerating rather than fading, in a period when the brokerages that buy the data were cutting costs. Compare the customers: CBRE runs a 4.7% operating margin and JLL 4.4%. The information supplier is expanding while the transaction businesses it serves grind along at low single-digit margins, which is the clearest available evidence about where the pricing power sits.
What that model earns at maturity is visible in companies that already run it. MSCI posts a 55.4% operating margin and SPGI 43.9%, both selling subscription data into financial markets. CoStar's own through-the-cycle operating margin is about 17.7%, on a business that has been spending heavily to build a second franchise rather than harvesting the first. The bull case does not require CoStar to reach the margins MSCI and SPGI achieve. It requires only that the spending stops being open-ended, at which point a subscription base this contracted converts a large share of incremental revenue into profit.
Then there is the second business, which is the reason the stock is where it is. Residential revenue rose from 1,012 million dollars in 2023 to 1,221 million in 2024 to 1,460 million in 2025, so the audience is being bought successfully even if it is being bought expensively. The filing records acquisitions of OnTheMarket, Visual Lease, Matterport and Domain, with 994 million dollars of the goodwill from the Domain transaction allocated to the residential segment. Whatever else is true of that strategy, it has assembled residential listing platforms across the U.S., the U.K. and Australia in a few years, and the balance sheet carried it without strain: net cash of about 206 million dollars on the funded-debt measure, liquid assets near 1.22 billion, and interest covered better than 20 times. The company can afford to be wrong for a while. That is not nothing when the alternative is a rights issue.
Bear Case
The earnings this price is measured against are not the earnings the company reported. On a trailing basis the operating margin is about -3.6%, meaning CoStar lost money at the operating line, and the whole valuation case rests on replacing that figure with a through-the-cycle margin near 17.7% and treating the gap as a cyclical trough. Sometimes that is the right call. It is only the right call if the thing depressing the margin is the cycle rather than a decision.
Here it is a decision, and the filing puts a number on it. Residential Real Estate adjusted profitability, on the company's own segment measure, fell 317 million dollars to a loss of 361 million dollars for 2025. That is not a commercial property downturn showing up in the accounts. That is what happens when a company spends to buy an audience in a market where the incumbent has never made money either: ZG generates 2.69 billion dollars of revenue growing 16.8% and converts it into a 0.4% operating margin. If that is the mature state of a residential portal rather than an early one, then the through-the-cycle margin doing the work in the valuation belongs to only half the company, and the other half is a permanent subtraction from it.
The quality of the contracted base has also been drifting. The 10-K discloses that revenue from subscription-based contracts with a term of at least one year were approximately 76%, 81%, and 82% of total revenue across the three reported years. The direction is the wrong way. Headline subscription revenue stays near ninety-three percent of the total, but the share locked up for a year or more has fallen six points, which is what happens when growth arrives through marketplaces and acquisitions rather than through the research licence that made the company defensible.
The company also names the technological threat itself, and does so without hedging: rapid advancement of generative AI Technologies may reduce the barrier to entry for new competitors. A proprietary database of building-level facts is exactly the sort of asset whose replacement cost falls when machines get better at reading documents and images. Add the disclosed dependence on search ranking, where the filing concedes that maintaining prominent positioning is not entirely within our control, and the residential strategy has two upstream gatekeepers it does not own.
Cash flow shows the same story from a different angle. Free cash flow ran about 231 million dollars while stock-based compensation ran about 210 million, so nearly all of the cash the business produced was matched by pay issued in shares, and the count has risen about 1.2% a year over four years. The downside is bounded to a degree: roughly 308 million dollars of equity stakes sit outside the operating businesses. Against an 11.4 billion dollar market value, that boundary is close to decorative. The real floor is whether the commercial franchise, on its own, justifies what the market is paying for both.
Valuation
The first thing to settle is which year you are valuing. Trailing operating profit is negative, so every method built on the last twelve months is measuring a company that did not make money. The alternative is to normalize: use the margins the business has earned through the cycle rather than the trough it just posted, which gives a through-the-cycle operating margin near 17.7% against the roughly -3.6% actually reported on a trailing basis. On that normalized basis the market is paying about 19 times through-cycle operating income at $27.66, and inverting it gives a requirement of roughly 14.3% operating profit growth a year for five years. Treat that as one solve under fixed assumptions, not a measurement.
Two things about that requirement deserve attention. About 46% of comparable fast growers sustained a pace like it for that long, which is a coin flip rather than a long shot. But the answer is unusually sensitive to the discount rate: each additional percentage point of cost of capital moves the implied growth requirement by roughly 6.8 percentage points. A modest change in what investors demand from a mid-cap growth name transforms the assumption from ordinary to heroic, which is a fair description of why this stock has been repriced rather than re-rated.
The methods used to triangulate value split the way they usually do for a company earning nothing at the moment. The asset-based, earnings-power and peer-multiple approaches all land far below the current price, and only the forward-growth approaches reach it. That pattern normally signals a durability premium, and here it partly does. But the distance those static methods report is exaggerated by their inputs: each one is computed off a year with essentially no earnings, so a method dividing by profit produces a small number almost mechanically. The signal is the direction, not the magnitude.
Peers frame the destination rather than the current price. MSCI and SPGI, running the same subscription data model at maturity, earn operating margins of 55.4% and 43.9%. Those are the economics the commercial franchise is being credited with eventually reaching. Meanwhile ZG, operating the residential model CoStar is buying into, converts 16.8% revenue growth into a 0.4% operating margin. The valuation implicitly assumes the first comparison applies and the second does not.
The balance sheet keeps the clock running. Net cash of about 206 million dollars on the funded-debt measure, gross borrowings near 1.01 billion, liquid assets of about 1.22 billion, and interest covered better than 20 times: nothing here forces a decision. What it does not do is generate the return by itself, since the share count has grown about 1.2% a year over the past four years rather than shrinking. The buyer at today's price is funding a second business out of the first one's cash flow and taking the view that the spending has an end date.
Catalysts
The next report lands on July 28, 2026. It follows a 2025 in which revenue rose about 19% while reported earnings all but disappeared, so the useful disclosure will be the residential segment's loss trajectory rather than the consolidated top line. A narrowing loss there changes the normalization argument; a widening one changes it the other way.
Management is changing at the same time. CoStar announced the appointment of a new chief financial officer, Robin Rossmann, effective July 31, 2026. A finance chief arriving days after a print is generally the person who owns the following year's spending plan, which matters more than usual for a company whose central question is how long the residential investment runs.
The sell side moved against the stock in the same fortnight. Baird cut its rating to Neutral from Outperform on July 14, and RBC Capital, Keefe Bruyette and Goldman Sachs each reduced their price targets on July 13. On the operating side, the company launched its commercial platform in France on July 1, continuing an international build that has now added the U.K., Australia and continental Europe. Its own research arm reported that U.S. retail asking rent growth slowed in the second quarter of 2026, which is a demand signal for the customers who renew those subscriptions.
Peer Cohorts (Per Segment, With Filing Citations)
Commercial Real Estate (reported)
- CBRE (CBRE GROUP, INC.)
- FY2025 10-K: …and global competitors across all of our business lines and the geographies that we serve, and further industry consolidation, fragmentation or innovation could lead to significant future competition. We compete across a variety of business disciplines within the commercial real estate services and investment…
- FY2025 10-K: Item 16. Form 10-K Summary 121 Schedule II - Valuation and Qualifying Accounts 122 SIGNATURES 127 Table of Contents PART I Item 1. Business. Company Overview CBRE is the world's largest commercial real estate services and investments firm (based on 2025 revenue). We derive competitive advantage from our considerable…
- JLL (Jones Lang LaSalle Incorporated)
- FY2025 10-K: , monitoring and compliance reporting. As sustainability becomes increasingly central to real estate decision-making, our capabilities allow us to help clients navigate this evolving landscape, create meaningful career opportunities for our employees, and generate value for our shareholders. COMPETITION We operate…
- FY2025 10-K: …including product positioning, target tenant identification and competitor analysis through to securing tenants and negotiating leases with terms that reflect our clients' best interests. In 2025, we completed approximately 19,500 agency leasing transactions representing 340 million square feet of space. Tenant…
- CWK (CUSHMAN & WAKEFIELD LTD.)
- FY2025 10-K: …investments and innovation. This growth has impacted demand for certain types of commercial real estate, especially data centers, as AI's physical footprint and its need for power, cooling and connectivity is driving additional demand for these spaces. Our Competitive Strengths Our business is designed and built…
- FY2025 10-K: …service lines. Depending on the geography or service, we face competition from other commercial real estate services providers, outsourcing companies, in-house corporate real estate departments, institutional lenders, insurance companies, investment banking firms, investment managers, accounting firms and consulting…
- CIGI (Colliers International Group Inc.)
- FY2025 40-F: …administration expenses of the Company excluding stock-based compensation and restructuring, optimization and integration costs. It also includes an adjustment to remove the impact of gains attributable to MSRs. The CODM is not provided with total asset information by segment and does not consider total assets in…
- FY2025 40-F: Revenue The Company generates revenue through its provision of commercial real estate services, which are comprised of leasing, capital markets and outsourcing as well as engineering services and investment management, as described below. (a) Leasing Leasing includes landlord and tenant representation brokerage…
- FSV (FirstService Corporation)
- FY2025 40-F: …items. 2024 acquisitions: The Company completed eight acquisitions in 2024, two in the FirstService Residential segment and six in the FirstService Brands segment. In the FirstService Residential segment, the Company acquired two property management firms operating in Tampa, Florida and San Francisco, California,…
- FY2025 40-F: …The loan amounts are measured based on the formula price of the underlying non-controlling interests, and interest rates are determined based on market rates plus a spread. The loans generally have terms of 5 to 10 years, but are open for repayment without penalty at any time. Page 26 of 28 19. Segmented information…
- MSCI (MSCI INC.)
- FY2025 10-K: …analysis. Additionally, the operating segment offers business intelligence products for real estate owners, managers, developers and brokers worldwide. The Private Capital Solutions operating segment provides a suite of tools to support investors in overseeing investment portfolios across public and private assets.…
- FY2025 10-K: Morgan Chase Bank, N.A., as Administrative Agent and L/C Issuer, Bank of America, N.A., as Syndication Agent and L/C Issuer, and the other lenders party thereto . 8-K 001-33812 10.1 8/20/2025 10.28 Agreement of Lease dated September 16, 2011, by and between 7 World Trade Center, LLC and MSCI Inc. 8-K 001-33812 10.1…
- SPGI (S&P Global Inc.)
- FY2025 10-K: …34 - Liabilities held for sale $ 43 $ - 1 Assets and liabilities held for sale as of December 31, 2025 relate to the divestitures of the Enterprise Data Management and thinkFolio businesses within our Market Intelligence segment. Additionally, assets held for sale include fixed assets related to our intent to sell…
- FY2025 10-K: …initiatives, unoccupied office space and Kensho, included in selling and general expenses. 118 Table of Contents The following table presents our revenue disaggregated by revenue type for the years ended December 31: (in millions) Market Intelligence Ratings Energy Mobility Indices Engineering Solutions Intersegment…
Residential Real Estate (reported)
- ZG (ZILLOW GROUP, INC.)
- FY2025 10-K: …on rental listings on Zillow, Trulia and HotPads mobile apps and websites, and on Realtor.com and beginning in February 2025, Redfin and its sites, including Rent.com and ApartmentGuide.com. We expect Rentals revenue to increase in absolute dollars during the three months ending March 31, 2026, primarily driven by…
- FY2025 10-K: …conditions. These factors have impacted the number of real estate transactions, need for advertising in our rentals marketplace, and demand for adjacent services. We believe we are well positioned to address existing and future demand for real estate transactions. We may also explore additional opportunities in the…
- OPEN (Opendoor Technologies Inc.)
- FY2025 10-K: …and (ii) amortization of debt issuance costs and debt discounts and interest expense related to our convertible senior notes. (12) Consists mainly of interest earned on cash, cash equivalents, restricted cash and marketable securities. Components of Our Results of Operations Revenue We generate the majority of our…
- FY2025 10-K: …a real estate platform that enables buyers and sellers to transact with Opendoor digitally, with fewer intermediaries and with simplicity, certainty, and control over the entire process. We're creating an experience where consumers can buy or sell a home as easily as they book travel or shop online today. Market…
- BEKE (KE Holdings Inc.)
- FY2025 20-F: …failure to perform the obligations to inspect the qualifications of information publishers; (iv) withholding rent deposits; (v) evicting tenants through violence, threats or other coercive measures; (vi) operating house leasing loan business which violates the regulations; (vii) high-risk business activities such as…
- FY2025 20-F: …provide that brokerage service fees should be determined through negotiations by all parties involved in the transaction, taking into account various factors, such as scope of services, quality of service and market supply-demand dynamics. Real estate agencies should reasonably reduce the service fees of housing…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
company earnings calendar via stockanalysis.com, July 2026 · fiscal 2025 results summary via stockanalysis.com, July 2026 · company announcement reported July 14, 2026 · Baird rating change, July 2026 · analyst target revisions, July 2026 · company announcement, July 2026 · CoStar market research release, July 2026