Twitter (TWTR) Gains But Lags Market: What You Should Know

Twitter (TWTR – Free Report) closed at $44.16 in the latest trading session, marking a +0.59% move from the prior day. This move lagged the S&P 500’s daily gain of 0.62%. At the same time, the Dow added 0.55%, and the tech-heavy Nasdaq lost 0.03%.

Heading into today, shares of the short messaging service had lost 7.62% over the past month, lagging the Computer and Technology sector’s loss of 1.01% and the S&P 500’s gain of 0.39% in that time.

Investors will be hoping for strength from Twitter as it approaches its next earnings release. On that day, Twitter is projected to report earnings of $0.33 per share, which would represent a year-over-year decline of 13.16%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.57 billion, up 21.7% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.14 per share and revenue of $5.09 billion, which would represent changes of +116.09% and +36.94%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Twitter. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Twitter is currently sporting a Zacks Rank of #5 (Strong Sell).

In terms of valuation, Twitter is currently trading at a Forward P/E ratio of 313.57. For comparison, its industry has an average Forward P/E of 64.26, which means Twitter is trading at a premium to the group.

The Internet – Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 199, putting it in the bottom 22% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.