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

Zacks Equity Research

Zynga (ZNGA) closed at $6.23 in the latest trading session, marking a +0.65% move from the prior day. This change outpaced the S&P 500's 0.41% gain on the day. At the same time, the Dow added 0.39%, and the tech-heavy Nasdaq gained 0.57%.

Prior to today's trading, shares of the maker of "FarmVille" and other online games had 0% over the past month. This has was narrower than the Consumer Discretionary sector's loss of 1.85% and lagged the S&P 500's gain of 0.1% in that time.

Wall Street will be looking for positivity from ZNGA as it approaches its next earnings report date. On that day, ZNGA is projected to report earnings of $0.05 per share, which would represent year-over-year growth of 150%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $361.57 million, up 54.56% from the year-ago period.

ZNGA's full-year Zacks Consensus Estimates are calling for earnings of $0.22 per share and revenue of $1.46 billion. These results would represent year-over-year changes of +175% and +50.62%, respectively.

It is also important to note the recent changes to analyst estimates for ZNGA. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 6.67% lower within the past month. ZNGA is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note ZNGA's current valuation metrics, including its Forward P/E ratio of 28.14. This represents a premium compared to its industry's average Forward P/E of 19.75.

Meanwhile, ZNGA's PEG ratio is currently 1.88. 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 Gaming industry currently had an average PEG ratio of 1.3 as of yesterday's close.

The Gaming industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 193, which puts it in the bottom 25% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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