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Chegg (CHGG) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, Chegg (CHGG) closed at $32.71, marking a +1.08% move from the previous day. This change outpaced the S&P 500's 0.41% gain on the day. Meanwhile, the Dow gained 0.57%, and the Nasdaq, a tech-heavy index, added 0.7%.

Prior to today's trading, shares of the provider of online textbook rental services had gained 4.93% over the past month. This has outpaced the Computer and Technology sector's gain of 2.38% and the S&P 500's gain of 2.04% in that time.

Wall Street will be looking for positivity from CHGG as it approaches its next earnings report date. This is expected to be November 4, 2019. In that report, analysts expect CHGG to post earnings of $0.09 per share. This would mark year-over-year growth of 28.57%. Our most recent consensus estimate is calling for quarterly revenue of $89.38 million, up 20.4% from the year-ago period.

CHGG's full-year Zacks Consensus Estimates are calling for earnings of $0.76 per share and revenue of $402.61 million. These results would represent year-over-year changes of +38.18% and +25.39%, respectively.

Any recent changes to analyst estimates for CHGG should also be noted by investors. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. CHGG is currently a Zacks Rank #3 (Hold).

Investors should also note CHGG's current valuation metrics, including its Forward P/E ratio of 42.82. For comparison, its industry has an average Forward P/E of 54.51, which means CHGG is trading at a discount to the group.

Investors should also note that CHGG has a PEG ratio of 1.43 right now. 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 2.81 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 57, which puts it in the top 23% 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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