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Facebook (FB) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Facebook (FB) closed the most recent trading day at $186.82, moving -1.64% from the previous trading session. This change lagged the S&P 500's 0.01% loss on the day. Meanwhile, the Dow gained 0.06%, and the Nasdaq, a tech-heavy index, lost 0.06%.

Prior to today's trading, shares of the social media company had gained 4.33% over the past month. This has outpaced the Computer and Technology sector's gain of 2.92% and the S&P 500's gain of 3.23% in that time.

Wall Street will be looking for positivity from FB as it approaches its next earnings report date. In that report, analysts expect FB to post earnings of $1.94 per share. This would mark year-over-year growth of 10.23%. Meanwhile, our latest consensus estimate is calling for revenue of $17.33 billion, up 26.23% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.39 per share and revenue of $70.31 billion. These totals would mark changes of -15.59% and +25.91%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for FB. These revisions help to show the ever-changing nature of near-term business trends. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 remained stagnant. FB currently has a Zacks Rank of #3 (Hold).

Investors should also note FB's current valuation metrics, including its Forward P/E ratio of 29.7. This represents a premium compared to its industry's average Forward P/E of 26.15.

Also, we should mention that FB has a PEG ratio of 1.38. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Internet - Services stocks are, on average, holding a PEG ratio of 2.64 based on yesterday's closing prices.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 160, putting it in the bottom 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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