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

Zacks Equity Research

Twitter (TWTR) closed the most recent trading day at $34.02, moving -0.21% from the previous trading session. This move lagged the S&P 500's daily gain of 0.03%. Elsewhere, the Dow lost 0.03%, while the tech-heavy Nasdaq added 0.14%.

Prior to today's trading, shares of the short messaging service had gained 4.89% over the past month. This has lagged the Computer and Technology sector's gain of 6.3% and outpaced the S&P 500's gain of 3.23% in that time.

Investors will be hoping for strength from TWTR as it approaches 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.

Investors might also notice recent changes to analyst estimates for TWTR. These recent revisions tend to reflect the evolving nature of short-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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. The Zacks Consensus EPS estimate has moved 2.3% higher within the past month. TWTR currently has a Zacks Rank of #3 (Hold).

Investors should also note TWTR's current valuation metrics, including its Forward P/E ratio of 40.02. This valuation marks a discount compared to its industry's average Forward P/E of 57.87.

We can also see that TWTR currently has a PEG ratio of 1.4. 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. Internet - Software stocks are, on average, holding a PEG ratio of 2.59 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 100, putting it in the top 40% 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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