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

Zacks Equity Research
·3 min read

Zynga (ZNGA) closed the most recent trading day at $9.84, moving +0.72% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.71%. At the same time, the Dow added 0.56%, and the tech-heavy Nasdaq gained 0.95%.

Prior to today's trading, shares of the maker of "FarmVille" and other online games had gained 10.15% over the past month. This has outpaced the Consumer Discretionary sector's gain of 1.37% and the S&P 500's gain of 0.17% in that time.

Wall Street will be looking for positivity from ZNGA as it approaches its next earnings report date. The company is expected to report EPS of $0.09, up 125% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $674.64 million, up 55.66% from the year-ago period.

Any recent changes to analyst estimates for ZNGA should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Within the past 30 days, our consensus EPS projection remained stagnant. ZNGA is currently a Zacks Rank #4 (Sell).

In terms of valuation, ZNGA is currently trading at a Forward P/E ratio of 22.9. Its industry sports an average Forward P/E of 30.05, so we one might conclude that ZNGA is trading at a discount comparatively.

Also, we should mention that ZNGA has a PEG ratio of 1.31. 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 1.31 based on yesterday's closing prices.

The Gaming industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 109, putting it in the top 43% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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