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Bull of the Day: Twitter (TWTR)

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Twitter, Inc. (TWTR - Free Report) is winning over Wall Street quarter by quarter. This Zacks Rank #1 (Strong Buy) is expected to grow both revenue and earnings by the double digits in both 2018 and 2019.

Twitter operates a social media platform in 40 languages around the world that provides users with updates on what is happening, including breaking news, globally.

Big Earnings Beat in Q3

On Oct 25, Twitter reported its third quarter results and beat the Zacks Consensus Estimate by 7 cents. Earnings were $0.21 versus the consensus of $0.14. That's a beat of 50%.

Revenue rose 29% to $758 million, up from $590 million.

Of that total revenue, most came from advertising revenue which rose 29% to $650 million. Half of the advertising revenue is now coming from the video ad format.

Wall Street is always watching the Daily Active Users count, which fell to 326 million from 335 million in the second quarter but that was mostly the result of the company's policy of purging fake, spam and abusive accounts.

Analysts Are Bullish on 2018 and 2019

The analysts mostly liked what they saw in this report as the majority raised 2018 full year guidance and also 2019 full year guidance.

This is a big change from the prior years where the analysts were mostly downbeat on earnings growth for the company. You can see the five year consensus expectations in the chart below.



The Zacks Consensus Estimate for 2018 jumped to $0.79 from $0.71 in the last month, with 12 analysts raising and just 2 lowering estimates in that time.

That's earnings growth of 79.5% over 2017 when it made just $0.44.

2019 is also looking strong. 11 estimates have been revised higher for 2019 in the last month, pushing the Zacks Consensus Estimate up to $0.88 from $0.78. That's another 11.3% growth in the earnings.

Revenue expectations also continue to be bullish. 2018 revenue is expected to be up 22.1% to $2.98 billion from $2.44 billion in 2017.

The good times are forecast to continue in 2019 with revenue jumping another 14.4% to $3.4 billion.

Still a Growth Stock

Twitter shares have fallen from their 2018 highs but are still up 34.3% year-to-date.



Despite weakness in the high growth social media and technology stocks like Facebook (FB - Free Report) , Twitter has managed to defy the negativity. Shares are still up 64% over the last year.

They're not cheap by any means. Twitter trades with a forward P/E of 41.

But with $6 billion cash on hand at the end of the third quarter and double digit growth projections, investors are wise to keep this one their short list.

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