Pinterest (PINS) Soars 54% YTD: Will This Uptrend Continue?
Shares of Pinterest Inc. PINS have surged 53.6% year to date, driven by growing customer engagement on the platform, a flexible business model and solid cash flow. Earnings estimates for the current and next fiscal year have increased 44.6% and 30.3%, respectively, since December 2022, implying robust inherent growth potential. Backed by strong fundamentals, this Zacks Rank #2 (Buy) stock appears primed for further appreciation.
Image Source: Zacks Investment Research
Growth Drivers
Headquartered in San Francisco, Pinterest provides a platform to show its users (called Pinners) visual recommendations (called Pins) based on their personal tastes and interests. Users then save and organize these recommendations into collections (called Boards).
Pinterest generates revenues by delivering ads on its website and mobile application. The company is helping advertisers reach millennials and Gen Z audiences who are more active on immersive mobile platforms.
It is different from other social media platforms and popular digital advertising channels. People turn to the Pinterest platform to get more information on a variety of subjects like weddings, fashion, travel or fitness but are not necessarily looking for a specific item. They are there to discover and that presents an appealing opportunity to advertisers as users or Pinners are often very open to purchasing.
The company is also emphasizing building new ad tools and formats to help grow the scope of monetization on the platform. This will enable advertisers to measure the results and conversion rates, which will improve their decision-making. Focus on improving operational rigor and the incorporation of sophisticated AI models to enhance relevancy and personalization is likely to bring long-term benefits.
It is taking various initiatives to bring more actionable content on the platform from a wide range of sources such as users, creators, publishers and retailers. This has resulted in a solid improvement in engagement metrics like sessions, impressions and saves across all regions. Healthy traction in emerging verticals like men’s fashion, auto, health and travel are tailwinds.
The company boasts a strong balance sheet and generates significant cash flow, which makes it an attractive stock for investors. For the fourth quarter of 2023, Pinterest anticipates net sales growth in the range of 11-13% year over year. Non-GAAP operating expenses are expected to decrease 9-13% year over year. A strong emphasis on cost optimization is expected to boost operational efficiency.
It has a long-term earnings growth expectation of 35.87% and delivered an earnings surprise of 37.3%, on average, in the trailing four quarters. PINS had an average brokerage recommendation (ABR) of 1.538 on a scale of 1 to 5 (Strong Buy to Strong Sell). ABR is the calculated average of actual recommendations made by brokerage firms and portends the future potential of the stock.
Other Key Picks
Arista Networks, Inc. ANET, carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build cloud architecture and enhance their cloud experience. Arista delivered a trailing four-quarter average earnings surprise of 12%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ANET holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. Arista is gaining market traction in 200- and 400-gigabit high-performance switching products and is well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
NVIDIA Corporation NVDA, currently carrying a Zacks Rank #2, delivered a trailing four-quarter average earnings surprise of 18.99%. In the last reported quarter, it delivered an earnings surprise of 19.64%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
United States Cellular Corporation USM, sporting a Zacks Rank #1 at present, is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services and a high-quality network to increase the competitiveness of local businesses and improve the efficiency of government operations.
U.S. Cellular has undertaken concrete steps to accelerate subscriber additions and improve churn management. The company aims to offer the best wireless experience to customers by providing superior quality network and national coverage. It is well-positioned to support the investment required for network enhancements, including the deployment of 5G technology. The company is well-positioned for continued demand for broadband.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
United States Cellular Corporation (USM) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
Pinterest, Inc. (PINS) : Free Stock Analysis Report
