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Twitter (TWTR) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Twitter (TWTR) closed at $30.87, marking a +0.19% move from the previous day. The stock lagged the S&P 500's daily gain of 0.45%. Elsewhere, the Dow gained 0.36%, while the tech-heavy Nasdaq added 0.52%.

Coming into today, shares of the short messaging service had lost 11.67% in the past month. In that same time, the Computer and Technology sector gained 5.91%, while the S&P 500 gained 2.08%.

Wall Street will be looking for positivity from TWTR as it approaches its next earnings report date. On that day, TWTR is projected to report earnings of -$0.03 per share, which would represent a year-over-year decline of 113.64%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $690.53 million, down 17.93% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.35 per share and revenue of $3.23 billion, which would represent changes of -85.23% and -6.66%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for TWTR. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 remained stagnant. TWTR is holding a Zacks Rank of #4 (Sell) right now.

Digging into valuation, TWTR currently has a Forward P/E ratio of 88.88. For comparison, its industry has an average Forward P/E of 67.19, which means TWTR is trading at a premium to the group.

Meanwhile, TWTR's PEG ratio is currently 2.3. 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. TWTR's industry had an average PEG ratio of 3.87 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 56, putting it in the top 23% 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.

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


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