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

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Zynga (ZNGA) closed at $8.77 in the latest trading session, marking a -1.79% move from the prior day. This move lagged the S&P 500's daily loss of 1.22%. Elsewhere, the Dow lost 0.19%, while the tech-heavy Nasdaq lost 0.53%.

Heading into today, shares of the maker of "FarmVille" and other online games had gained 39.1% over the past month, outpacing the Consumer Discretionary sector's loss of 10.68% and the S&P 500's loss of 6.58% in that time.

Investors will be hoping for strength from Zynga as it approaches its next earnings release. On that day, Zynga is projected to report earnings of $0.08 per share, which would represent year-over-year growth of 100%. Meanwhile, our latest consensus estimate is calling for revenue of $720.04 million, up 3.02% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for Zynga. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

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 has moved 0.69% higher. Zynga currently has a Zacks Rank of #2 (Buy).

In terms of valuation, Zynga is currently trading at a Forward P/E ratio of 21.91. Its industry sports an average Forward P/E of 16.14, so we one might conclude that Zynga is trading at a premium comparatively.

The Gaming industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 188, putting it in the bottom 27% 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.

To follow ZNGA in the coming trading sessions, be sure to utilize Zacks.com.


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