Coming into today, shares of the maker of “FarmVille” and other online games had lost 17.84% in the past month. In that same time, the Consumer Discretionary sector lost 5.75%, while the S&P 500 lost 5.07%.
ZNGA will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.06, up 300% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $665.9 million, up 6.04% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $0.35 per share and revenue of $2.81 billion, which would represent changes of +400% and +23.91%, respectively, from the prior year.
Any recent changes to analyst estimates for ZNGA should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.
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.
Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. ZNGA is currently a Zacks Rank #5 (Strong Sell).
Digging into valuation, ZNGA currently has a Forward P/E ratio of 20.49. This valuation marks a discount compared to its industry’s average Forward P/E of 21.37.
The Gaming industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 157, putting it in the bottom 39% 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.
To follow ZNGA in the coming trading sessions, be sure to utilize Zacks.com.