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Twitter (TWTR) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Twitter (TWTR) closed the most recent trading day at $45.41, moving +0.24% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.09%. Meanwhile, the Dow gained 0.26%, and the Nasdaq, a tech-heavy index, lost 0.17%.

Prior to today's trading, shares of the short messaging service had gained 7.68% over the past month. This has outpaced the Computer and Technology sector's gain of 5.65% and the S&P 500's gain of 4.92% in that time.

TWTR will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.20, down 4.76% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $876.26 million, up 15.58% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.46 per share and revenue of $3.56 billion. These totals would mark changes of +186.05% and +17.06%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for TWTR. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. TWTR currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that TWTR has a Forward P/E ratio of 18.44 right now. This represents a discount compared to its industry's average Forward P/E of 51.34.

Investors should also note that TWTR has a PEG ratio of 0.78 right now. 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 was holding an average PEG ratio of 2.84 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 98, putting it in the top 39% 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.

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


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