Interested in a spacious fixer-upper? The stairs creak. The walls whisper. And don't get me started about what's inside some of those closets.
Analysts were expecting the company to earn $0.69 a share this year. The company's new guidance has it earning between $0.24 and $0.30 a share, after what will likely be a $0.12-per-share hit on stock-based compensation. Revenues will clock in between 21% and 32% higher, also well off the market's expectation of 50% top line growth in 2006.
Most Wall Streeters are still backing out the options-based accounting in their forecasts, but even if you tack that back on, you still have a company that nearly halved its bottom-line projection.
No reasonable offer refused
The stock hasn't traded this cheaply since it put itself on the market with its IPO nearly two years ago. Is it low enough for you?
A pessimist will point out that with the stock down to $10.50 in aftermarket trading, it's not much of a bargain, even trading at just 25 times the high end of its forward earnings guidance. An optimist will overlook that and point out that the HouseValues expects growing sales and falling earnings because the company's investments in fortifying its future position will crush its margins.
That same optimist will point to the $84.9 million in cash and short-term investments on the company's balance sheet -- approximately a third of its now marked-down market cap. The pessimist will add that when the cash is backed out -- along with the interest income after taxes that the greenery is likely to generate in 2006 -- the company would be earning $0.06 less per share than its already bleak outlook.
They know where you live
I'll admit that I had a pretty creepy experience with HouseValues last month. After checking out the instant gratification of Zillow.com, I decided to give HouseValues a shot. My assigned Realtor was quick with his assessment, and it was pretty much what Zillow had claimed my home was worth six months ago. Yet Zillow didn't nag me after that initial estimate -- it didn't even know who I was.
My assigned HouseValues Realtor, on the other hand, emailed me a few more times and then sent over a folder with a waxy photo of my home and snazzy copywriting, as if it were already on the market. Apparently, I live in a "spacious and distinctive home." How quaint.
Good report in sturdy binding. Great unsolicited picture. But once my wife pointed out how you could see my car parked in the driveway, I started to feel violated. It's hard to explain the feeling that you were being watched without your knowledge or permission. I took a bath and still came out dirty.
Keep it real, Realtors
The real estate landscape is changing, and it has nothing to do with rising mortgage rates and the housing bubble. I'm talking about how the art of moving homes is evolving, with the Internet as the great leveler.
It happened to travel agents, as online booking sites demystified the travel-planning process. It's happening in other areas like online retail, digital music, and even your local florist. Let's not assume that real estate agents won't be in for a similarly rude awakening.
Sites like ZipRealty
Zillow isn't perfect, but at least I know it's not coming after my digs voyeuristically with a digital camera.
It's like playing Monopoly, only with real money
I may not be a fan of HouseValues as it stands. My fellow Fool Rich Smith helped me out by requesting a HouseValues estimate, and his Realtor took a dozen days to get back to him. The model just doesn't feel relevant to me anymore. However, that doesn't mean that even I may not consider this recent Hidden Gems stock pick attractive under the appropriate circumstances.
For starters, this past quarter the company launched HomePages.com. It's a slick home-listings site with nifty mapping. It just needs to be populated with more listings, and that may mean ruffling a few feathers in the realty community by opening up the submitting process for that particular site. If HouseValues does, and the price is still low, I'm looking for a pen and asking where to sign. The company's recently acquired mortgage-lead business is also an interesting puzzle piece here. In other words, I'm not giving up on HouseValues yet, but I'm not all that sold on it in "as is" condition.
Zillow, in beta form, is still rough around the edges, but HouseValues will answer back with something that is more consumer-friendly -- not the three pages of entry-field teasing that currently serves as HouseValues' flagship site.
At least HouseValues is aware of the Zillow threat. Tom Gardner and Bill Mann spoke to the company's CEO last month, just days before Zillow's launch, and asked him about it. Subscribers to the Hidden Gems newsletter service have access to the full interview, but you can sign up for a free 30-day trial if you want to check it out, too. If you're a HouseValues investor -- or an investor interested in this space -- it's a pretty compelling exchange.
So far, HouseValues has been a pretty lousy call for the newsletter, but that's been one of the rare exceptions. The average pick is trading 39% higher, while the market has averaged a mere 12% advance. HouseValues may be the ugly home in the Hidden Gems neighborhood, but doesn't that the old adage say that's just the one to buy?
Longtime Fool contributor Rick Munarriz isn't interested in selling his home, even if he recognizes that the once red-hot South Florida market is quickly cooling. He does not own shares in any of the stocks mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.