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Chegg (CHGG) Gains As Market Dips: What You Should Know

Zacks Equity Research
·3 mins read

Chegg (CHGG) closed at $76.17 in the latest trading session, marking a +1.89% move from the prior day. The stock outpaced the S&P 500's daily loss of 1.4%. Elsewhere, the Dow lost 1.34%, while the tech-heavy Nasdaq lost 1.57%.

Heading into today, shares of the provider of online textbook rental services had gained 10.04% over the past month, outpacing the Computer and Technology sector's loss of 0.17% and the S&P 500's loss of 0.46% in that time.

CHGG will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.12, down 33.33% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $143.90 million, up 52.84% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.27 per share and revenue of $612.94 million. These totals would mark changes of +39.56% and +49.16%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for CHGG. Recent revisions tend to reflect the latest near-term business trends. 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. Within the past 30 days, our consensus EPS projection remained stagnant. CHGG currently has a Zacks Rank of #3 (Hold).

In terms of valuation, CHGG is currently trading at a Forward P/E ratio of 58.92. Its industry sports an average Forward P/E of 79.53, so we one might conclude that CHGG is trading at a discount comparatively.

We can also see that CHGG currently has a PEG ratio of 1.96. 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 Internet - Software was holding an average PEG ratio of 6.35 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 168, which puts it in the bottom 34% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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Zacks Investment Research