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YY (YY) Gains As Market Dips: What You Should Know

Zacks Equity Research

YY (YY) closed the most recent trading day at $64.60, moving +0.4% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.16%. Meanwhile, the Dow gained 0.11%, and the Nasdaq, a tech-heavy index, lost 0.44%.

Heading into today, shares of the social media company had lost 6.81% over the past month, lagging the Computer and Technology sector's gain of 6.51% and the S&P 500's gain of 4% in that time.

Wall Street will be looking for positivity from YY as it approaches its next earnings report date. On that day, YY is projected to report earnings of $1.65 per share, which would represent a year-over-year decline of 18.72%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $881.45 million, up 54.58% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.72 per share and revenue of $3.22 billion. These totals would mark changes of -5.75% and +36.35%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for YY. 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. 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, 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 remained stagnant. YY currently has a Zacks Rank of #3 (Hold).

In terms of valuation, YY is currently trading at a Forward P/E ratio of 9.57. Its industry sports an average Forward P/E of 26.74, so we one might conclude that YY is trading at a discount comparatively.

Meanwhile, YY's PEG ratio is currently 0.67. 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. The Internet - Content was holding an average PEG ratio of 0.92 at yesterday's closing price.

The Internet - Content industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 99, which puts it in the top 39% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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