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Momo Inc. (MOMO) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
QDF and SMH saw massive trading volume in yesterday session.

Momo Inc. (MOMO) closed at $24.49 in the latest trading session, marking a +0.82% move from the prior day. This change outpaced the S&P 500's 0.01% gain on the day. At the same time, the Dow added 0.35%, and the tech-heavy Nasdaq gained 0.45%.

Coming into today, shares of the company had lost 20.6% in the past month. In that same time, the Computer and Technology sector lost 5.51%, while the S&P 500 lost 7.29%.

MOMO will be looking to display strength as it nears its next earnings release, which is expected to be March 6, 2019. On that day, MOMO is projected to report earnings of $0.52 per share, which would represent a year-over-year decline of 1.89%. Our most recent consensus estimate is calling for quarterly revenue of $535 million, up 38.47% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.37 per share and revenue of $2.02 billion, which would represent changes of +33.9% and +53.08%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for MOMO. These revisions help to show the ever-changing nature of 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 8.01% lower. MOMO is holding a Zacks Rank of #5 (Strong Sell) right now.

Digging into valuation, MOMO currently has a Forward P/E ratio of 10.27. For comparison, its industry has an average Forward P/E of 31.8, which means MOMO is trading at a discount to the group.

Also, we should mention that MOMO has a PEG ratio of 0.43. 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 - Software and Services industry currently had an average PEG ratio of 2.22 as of yesterday's close.

The Internet - Software and Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 151, putting it in the bottom 41% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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