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Here's Why Twitter (TWTR) Stock Looks Like a Strong Buy Right Now
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Shares of Twitter jumped over 4% Monday morning as part of a broader tech stock resurgence, including Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) . Twitter stock is also still up nearly 50% over the last year and many of its current fundamentals appear strong. So, let’s see why Twitter stock seems like a strong buy right now.
Overview
Twitter, along with Facebook has faced increased scrutiny over its handling of “fake news” and the spread of misinformation on its platform. With that said, Twitter and the much larger Facebook are likely to remain vital social media outlets for the foreseeable future. Plus, Twitter and its ability to instantly disseminate news and stream live video will only become more attractive to advertisers as non-ad supported platforms such as Netflix (NFLX - Free Report) expand.
Last quarter, Twitter’s adjusted Q3 earnings soared 110% to reach $0.21 per share. This not only topped our Zacks Consensus Estimate of $0.14 but also marked the fourth straight quarter that Jack Dorsey’s company posted GAAP profitability. Meanwhile, Twitter’s quarterly revenues climbed 29%.
Twitter also saw its daily active user base jump 9% even though the company actively started to rid its platform of fake accounts. On top of that, Twitter’s total ad engagements surged 50% and cost per engagement sunk 14%. These two metrics could be signs that the company is headed in the right direction since advertising accounted to 86% of quarterly revenues.
Price & Valuation
As we mentioned at the top, shares of Twitter have climbed 48% over the last 52 weeks, which crushes the S&P 500’s sideways movement. Shares of TWTR jumped 4.72% to $32.55 per share through mid-morning trading Monday. This, however, still marked a 32% downturn from its 52-week high and could set up a solid buying opportunity for those high on Twitter stock.
Moving on, Twitter stock is currently trading at 62.5X forward 12-month Zacks Consensus EPS estimates. This represents a massive discount compared to its year-long median of 108.8X as the tech stock’s valuation picture slowly becomes more reasonable.
Outlook & Earnings Trends
Looking ahead, Twitter’s Q4 revenues are projected to climb by 18.2% to $864.87 million. TWTR’s fiscal 2018 revenues are expected to jump 22% to reach $2.98 billion.
At the bottom end of the income statement, Twitter’s outlook appears even stronger. Twitter’s adjusted Q4 earnings are projected to soar 36.8% to $0.25 per share. Meanwhile, its full-year earnings are projected to skyrocket nearly 82%.
Investors should also note that Twitter has received a ton of upward earnings estimate revisions over the past 60 days for Q4, as well as fiscal 2018 and 2019. The table below helps to show how much more positive Twitter’s earnings picture has become.
Bottom Line
Twitter is currently a Zacks Rank #1 (Strong Buy) based, in large part, on its recent earnings estimate trends. The platform is also likely to remain invaluable for years to come and is one that advertisers should favor, especially as Twitter dives deeper into live streaming video.
Yet, the potential for government intervention could harm Twitter and TWTR stock. Lastly, Monday’s bounce-back could prove to be just a blip on the radar amid the larger market downturn.
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Here's Why Twitter (TWTR) Stock Looks Like a Strong Buy Right Now
Shares of Twitter jumped over 4% Monday morning as part of a broader tech stock resurgence, including Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) . Twitter stock is also still up nearly 50% over the last year and many of its current fundamentals appear strong. So, let’s see why Twitter stock seems like a strong buy right now.
Overview
Twitter, along with Facebook has faced increased scrutiny over its handling of “fake news” and the spread of misinformation on its platform. With that said, Twitter and the much larger Facebook are likely to remain vital social media outlets for the foreseeable future. Plus, Twitter and its ability to instantly disseminate news and stream live video will only become more attractive to advertisers as non-ad supported platforms such as Netflix (NFLX - Free Report) expand.
Last quarter, Twitter’s adjusted Q3 earnings soared 110% to reach $0.21 per share. This not only topped our Zacks Consensus Estimate of $0.14 but also marked the fourth straight quarter that Jack Dorsey’s company posted GAAP profitability. Meanwhile, Twitter’s quarterly revenues climbed 29%.
Twitter also saw its daily active user base jump 9% even though the company actively started to rid its platform of fake accounts. On top of that, Twitter’s total ad engagements surged 50% and cost per engagement sunk 14%. These two metrics could be signs that the company is headed in the right direction since advertising accounted to 86% of quarterly revenues.
Price & Valuation
As we mentioned at the top, shares of Twitter have climbed 48% over the last 52 weeks, which crushes the S&P 500’s sideways movement. Shares of TWTR jumped 4.72% to $32.55 per share through mid-morning trading Monday. This, however, still marked a 32% downturn from its 52-week high and could set up a solid buying opportunity for those high on Twitter stock.
Moving on, Twitter stock is currently trading at 62.5X forward 12-month Zacks Consensus EPS estimates. This represents a massive discount compared to its year-long median of 108.8X as the tech stock’s valuation picture slowly becomes more reasonable.
Outlook & Earnings Trends
Looking ahead, Twitter’s Q4 revenues are projected to climb by 18.2% to $864.87 million. TWTR’s fiscal 2018 revenues are expected to jump 22% to reach $2.98 billion.
At the bottom end of the income statement, Twitter’s outlook appears even stronger. Twitter’s adjusted Q4 earnings are projected to soar 36.8% to $0.25 per share. Meanwhile, its full-year earnings are projected to skyrocket nearly 82%.
Investors should also note that Twitter has received a ton of upward earnings estimate revisions over the past 60 days for Q4, as well as fiscal 2018 and 2019. The table below helps to show how much more positive Twitter’s earnings picture has become.
Bottom Line
Twitter is currently a Zacks Rank #1 (Strong Buy) based, in large part, on its recent earnings estimate trends. The platform is also likely to remain invaluable for years to come and is one that advertisers should favor, especially as Twitter dives deeper into live streaming video.
Yet, the potential for government intervention could harm Twitter and TWTR stock. Lastly, Monday’s bounce-back could prove to be just a blip on the radar amid the larger market downturn.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>