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

Zacks Equity Research

Facebook (FB) closed the most recent trading day at $206.18, moving -0.06% from the previous trading session. This move lagged the S&P 500's daily gain of 0.09%. Meanwhile, the Dow gained 0.34%, and the Nasdaq, a tech-heavy index, added 0.23%.

Prior to today's trading, shares of the social media company had gained 4.23% over the past month. This has lagged the Computer and Technology sector's gain of 4.31% and outpaced the S&P 500's gain of 3.81% in that time.

Wall Street will be looking for positivity from FB as it approaches its next earnings report date. The company is expected to report EPS of $2.50, up 5.04% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $20.82 billion, up 23.1% from the prior-year quarter.

FB's full-year Zacks Consensus Estimates are calling for earnings of $6.37 per share and revenue of $70.44 billion. These results would represent year-over-year changes of -15.85% and +26.15%, respectively.

Any recent changes to analyst estimates for FB should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.27% higher. FB is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, FB currently has a Forward P/E ratio of 32.37. This represents a no noticeable deviation compared to its industry's average Forward P/E of 32.37.

It is also worth noting that FB currently has a PEG ratio of 1.57. 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. Internet - Services stocks are, on average, holding a PEG ratio of 2.84 based on yesterday's closing prices.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 97, which puts it in the top 39% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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