Over the past three decades, CoStar Group (CSGP 0.28%) has strategically used acquisitions to boost its growth. The real estate data and analytics company now has 24 companies and property-listing platforms under its umbrella and its next acquisition could be right around the corner.

News Corp. has confirmed that CoStar Group is in talks with it to purchase Move Inc., the parent company of real estate analytics leader Realtor.com. The deal is far from finalized, but it's an exciting prospect for CoStar investors. 

Here's the deal

Near the end of January 2022, news began spreading that CoStar Group was in private negotiations with Move to acquire Realtor.com for an estimated $3 billion. The talk now is that the deal is close. The transaction would give CoStar Group exposure to the residential real estate world through Realtor.com's agent services, data and analytics, and listing platform.

CoStar Group largely specializes in commercial real estate, owning popular listing sites including Ten-X and LoopNet. The company has grown its presence in the residential world through the acquisitions of listing platforms Homes.com, Homesnap, and Realla. It also owns rental listing platforms Apartments.com, Apartment Finder, and ForRent.com, which help people find and secure rental housing.

Acquiring Realtor.com and moving deeper into the world of homebuying and selling would undoubtedly help CoStar Group increase its earnings. It could earn a transaction fee for agents referred through the Realtor.com site, gain new bookings for advertising, and benefit from new market exposure through subsidiaries of Realtor.com like UpNest and Moving.com. It would also give the company more residential data points, allowing it to compete with major residential real estate tech companies Zillow Group and Redfin.

CoStar Group has $4.7 billion in cash and cash equivalents on hand, so the company could easily complete this acquisition,  which is rumored to be around $3 billion.

But will the deal happen? The big concern is that federal regulations might block the transaction. The Federal Trade Commission (FTC) prevented CoStar Group from acquiring RentPath in 2020 because the acquisition would have given the company too much control over the rental listing marketplace. Since Realtor.com is a residential listing platform, the FTC could block the deal on similar grounds.

Does this potential deal make CoStar Group a buy?

Investors shouldn't buy CoStar solely because of this potential acquisition. There is no denying it would take the company to the next level in growth and market reach. However, there is no guarantee the deal will go through.

But CoStar Group is still a worthwhile investment. I believe it is one of the best growth stocks in the market today, whether this deal materializes or not. The company has outperformed the broader market over the last decade with a total return of 696% and is up over the past year while big-name tech stocks are not. 

Marketing initiatives and recent acquisitions have helped consistently grow CoStar's revenue. As of its most recently reported earnings, bookings were up 62% year over year while revenue grew by 12%.

If the company accomplishes its low-end outlook for its full year, revenue would grow by roughly 12% compared to the previous year, which would be in line with its year-over-year growth over the past several years.

Investors have taken notice of the stock's healthy earnings, which has helped the shares grow by nearly 11% over the past 12 months. That means CoStar Group is trading at a premium: around 51 times its forward earnings estimates.

I normally avoid premium-priced stocks, but CoStar Group is a company I see continuing to grow. Even if this acquisition doesn't go through, it will likely find another company to help boost its earnings and I think it's worth the premium price.