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Zynga (ZNGA) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Zynga (ZNGA) closed the most recent trading day at $6.34, moving +1.44% from the previous trading session. This change outpaced the S&P 500's 0.47% gain on the day. Meanwhile, the Dow lost 0.29%, and the Nasdaq, a tech-heavy index, added 0.85%.

Coming into today, shares of the maker of "FarmVille" and other online games had gained 6.47% in the past month. In that same time, the Consumer Discretionary sector lost 0.32%, while the S&P 500 gained 2.08%.

ZNGA will be looking to display strength as it nears its next earnings release, which is expected to be July 31, 2019. In that report, analysts expect ZNGA to post earnings of $0.05 per share. This would mark year-over-year growth of 150%. Meanwhile, our latest consensus estimate is calling for revenue of $361.97 million, up 54.74% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.23 per share and revenue of $1.46 billion, which would represent changes of +187.5% and +50.8%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ZNGA. 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 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. Within the past 30 days, our consensus EPS projection has moved 4.76% higher. ZNGA currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that ZNGA has a Forward P/E ratio of 27.69 right now. For comparison, its industry has an average Forward P/E of 21.65, which means ZNGA is trading at a premium to the group.

It is also worth noting that ZNGA currently has a PEG ratio of 1.85. 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. Gaming stocks are, on average, holding a PEG ratio of 1.42 based on yesterday's closing prices.

The Gaming industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 154, putting it in the bottom 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.

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


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