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Facebook (FB) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research
·3 mins read

Facebook (FB) closed the most recent trading day at $258.12, moving -0.21% from the previous trading session. This move lagged the S&P 500's daily gain of 1.74%. At the same time, the Dow added 1.91%, and the tech-heavy Nasdaq gained 1.88%.

Heading into today, shares of the social media company had lost 4.61% over the past month, lagging the Computer and Technology sector's loss of 1.67% and the S&P 500's loss of 1.86% in that time.

Investors will be hoping for strength from FB as it approaches its next earnings release, which is expected to be October 29, 2020. In that report, analysts expect FB to post earnings of $1.91 per share. This would mark a year-over-year decline of 9.91%. Our most recent consensus estimate is calling for quarterly revenue of $19.72 billion, up 11.7% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.10 per share and revenue of $80.37 billion. These totals would mark changes of +25.97% and +13.68%, respectively, from last year.

It is also important to note the 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 has moved 0.54% higher. FB currently has a Zacks Rank of #3 (Hold).

Digging into valuation, FB currently has a Forward P/E ratio of 31.94. This valuation marks a discount compared to its industry's average Forward P/E of 38.23.

Also, we should mention that FB has a PEG ratio of 1.69. 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. The Internet - Services was holding an average PEG ratio of 1.99 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 124, putting it in the top 50% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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Zacks Investment Research