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Zynga (ZNGA) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research
·3 min read

In the latest trading session, Zynga (ZNGA) closed at $8.97, marking a -0.88% move from the previous day. This change lagged the S&P 500's daily gain of 2.62%. Elsewhere, the Dow gained 3.16%, while the tech-heavy Nasdaq added 2.06%.

ZNGA will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.07, up 275% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $493.37 million, up 31.09% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.29 per share and revenue of $1.85 billion. These totals would mark changes of +2800% and +18.51%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for ZNGA. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 70.13% higher. ZNGA is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note ZNGA's current valuation metrics, including its Forward P/E ratio of 30.85. This represents a premium compared to its industry's average Forward P/E of 21.32.

Also, we should mention that ZNGA has a PEG ratio of 2.47. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Gaming was holding an average PEG ratio of 1.78 at yesterday's closing price.

The Gaming industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 86, which puts it in the top 34% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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Zacks Investment Research