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

Zacks Equity Research

Twitter (TWTR) closed at $33.42 in the latest trading session, marking a +1.95% move from the prior day. This move outpaced the S&P 500's daily gain of 1.01%. Elsewhere, the Dow gained 0.66%, while the tech-heavy Nasdaq added 1.43%.

Prior to today's trading, shares of the short messaging service had gained 2.34% over the past month. This has lagged the Computer and Technology sector's gain of 2.89% and outpaced the S&P 500's gain of 0.19% in that time.

TWTR will be looking to display strength as it nears its next earnings release, which is expected to be February 6, 2020. In that report, analysts expect TWTR to post earnings of $0.28 per share. This would mark a year-over-year decline of 9.68%. Meanwhile, our latest consensus estimate is calling for revenue of $997.35 million, up 9.74% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for TWTR. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, 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. Within the past 30 days, our consensus EPS projection has moved 2.3% higher. TWTR is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, TWTR currently has a Forward P/E ratio of 38.48. This valuation marks a discount compared to its industry's average Forward P/E of 56.47.

Also, we should mention that TWTR has a PEG ratio of 1.35. 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 industry currently had an average PEG ratio of 2.65 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 98, putting it in the top 39% 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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