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Chegg (CHGG) Gains As Market Dips: What You Should Know

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Chegg (CHGG - Free Report) closed the most recent trading day at $83.46, moving +1.55% from the previous trading session. This change outpaced the S&P 500's 0.44% loss on the day. At the same time, the Dow lost 0.62%, and the tech-heavy Nasdaq gained 0.5%.

Coming into today, shares of the provider of online textbook rental services had gained 22.92% in the past month. In that same time, the Computer and Technology sector gained 4.22%, while the S&P 500 gained 1.39%.

CHGG will be looking to display strength as it nears its next earnings release. On that day, CHGG is projected to report earnings of $0.52 per share, which would represent year-over-year growth of 48.57%. Our most recent consensus estimate is calling for quarterly revenue of $189.68 million, up 51.14% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.28 per share and revenue of $628.25 million, which would represent changes of +40.66% and +52.89%, respectively, from the prior year.

Any recent changes to analyst estimates for CHGG 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. CHGG currently has a Zacks Rank of #3 (Hold).

In terms of valuation, CHGG is currently trading at a Forward P/E ratio of 65.2. Its industry sports an average Forward P/E of 75.33, so we one might conclude that CHGG is trading at a discount comparatively.

We can also see that CHGG currently has a PEG ratio of 2.17. 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 Internet - Software was holding an average PEG ratio of 5.74 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 185, which puts it in the bottom 28% 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.

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