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Facebook (FB) Gains But Lags Market: What You Should Know

Zacks Equity Research
Rent-A-Center (RCII) closed at $25.26 in the latest trading session, marking a -0.24% move from the prior day.

In the latest trading session, Facebook (FB) closed at $166.08, marking a +0.39% move from the previous day. This change lagged the S&P 500's 1.09% gain on the day. Elsewhere, the Dow gained 0.84%, while the tech-heavy Nasdaq added 1.42%.

Prior to today's trading, shares of the social media company had gained 1.77% over the past month. This has lagged the Computer and Technology sector's gain of 4.97% and outpaced the S&P 500's gain of 1.18% in that time.

Investors will be hoping for strength from FB as it approaches its next earnings release. On that day, FB is projected to report earnings of $1.65 per share, which would represent a year-over-year decline of 2.37%. Our most recent consensus estimate is calling for quarterly revenue of $14.96 billion, up 25.03% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.53 per share and revenue of $68.89 billion. These totals would mark changes of -0.53% and +23.37%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for FB. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. The Zacks Consensus EPS estimate has moved 0.22% lower within the past month. FB is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note FB's current valuation metrics, including its Forward P/E ratio of 21.97. This valuation marks a discount compared to its industry's average Forward P/E of 25.87.

Also, we should mention that FB has a PEG ratio of 1.21. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Internet - Services stocks are, on average, holding a PEG ratio of 2.91 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 153, putting it in the bottom 40% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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