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Zynga (ZNGA) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 min read

Zynga (ZNGA) closed at $8.99 in the latest trading session, marking a -1.86% move from the prior day. This move lagged the S&P 500's daily loss of 1.63%. At the same time, the Dow lost 1.44%, and the tech-heavy Nasdaq lost 1.65%.

Coming into today, shares of the maker of "FarmVille" and other online games had gained 9.31% in the past month. In that same time, the Consumer Discretionary sector gained 0.88%, while the S&P 500 gained 2.86%.

Wall Street will be looking for positivity from ZNGA as it approaches its next earnings report date. This is expected to be November 4, 2020. Our most recent consensus estimate is calling for quarterly revenue of $627.14 million, up 58.85% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.36 per share and revenue of $2.22 billion, which would represent changes of +3500% and +41.89%, respectively, from the prior year.

Any recent changes to analyst estimates for ZNGA should also be noted by investors. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 2.19% higher within the past month. ZNGA is holding a Zacks Rank of #4 (Sell) right now.

Digging into valuation, ZNGA currently has a Forward P/E ratio of 25.55. This valuation marks a discount compared to its industry's average Forward P/E of 33.13.

It is also worth noting that ZNGA currently has a PEG ratio of 1.27. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZNGA's industry had an average PEG ratio of 1.13 as of yesterday's close.

The Gaming industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 214, putting it in the bottom 16% 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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Zacks Investment Research