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

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Zynga (ZNGA - Free Report) closed at $9.93 in the latest trading session, marking a -0.6% move from the prior day. This change lagged the S&P 500's 0.08% gain on the day. Meanwhile, the Dow gained 0.38%, and the Nasdaq, a tech-heavy index, lost 0.29%.

Coming into today, shares of the maker of "FarmVille" and other online games had gained 24.88% in the past month. In that same time, the Consumer Discretionary sector gained 7.1%, while the S&P 500 gained 3.8%.

ZNGA will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.09, up 125% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $674.64 million, up 55.66% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.38 per share and revenue of $2.25 billion. These totals would mark changes of +3700% and +43.58%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for ZNGA. These recent revisions tend to reflect the evolving nature of short-term business trends. 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.

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 #3 (Hold).

Digging into valuation, ZNGA currently has a Forward P/E ratio of 26.55. This represents a discount compared to its industry's average Forward P/E of 33.17.

Meanwhile, ZNGA's PEG ratio is currently 1.51. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. ZNGA's industry had an average PEG ratio of 1.29 as of yesterday's close.

The Gaming industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 175, which puts it in the bottom 32% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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