CoStar Group Inc (CSGP · NASDAQ)

CoStar shares have fallen 31.6% below their 200-day moving average and sit 66.9% off their 52-week high at $28.09, with the stock's removal from the FTSE All-World Index on September 19 adding a potential overhang on index-linked ownership. Fundamentals have improved markedly, however: revenue rose 18.4% YoY to $925.0M in the June quarter with operating income of $76.0M, a sharp recovery from the prior quarter's $3.0M, and the company beat EPS estimates in all four of its last reports. The June quarter's $12.0M free cash flow remains thin against $3.56B in TTM revenue, and profitability metrics are modest (2.1% profit margin, 0.9% ROE) even as leverage stays moderate at 2.9x debt/EBITDA with $1.27B in cash. The market's 156.06 P/E against a 0.105 PEG reflects a wide gap between current earnings and expected growth.