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Facebook (FB) Gains As Market Dips: What You Should Know

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Facebook (FB - Free Report) closed the most recent trading day at $274.50, moving +0.6% from the previous trading session. This change outpaced the S&P 500's 0.3% loss on the day. Elsewhere, the Dow lost 0.57%, while the tech-heavy Nasdaq added 0.09%.

Coming into today, shares of the social media company had gained 2.05% in the past month. In that same time, the Computer and Technology sector gained 6.16%, while the S&P 500 gained 4.43%.

Investors will be hoping for strength from FB as it approaches its next earnings release, which is expected to be January 27, 2021. In that report, analysts expect FB to post earnings of $3.21 per share. This would mark year-over-year growth of 25.39%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $26.26 billion, up 24.57% from the year-ago period.

Investors should also note any recent changes to analyst estimates for FB. 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.

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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.73% higher within the past month. FB currently has a Zacks Rank of #2 (Buy).

Digging into valuation, FB currently has a Forward P/E ratio of 25.85. Its industry sports an average Forward P/E of 33.51, so we one might conclude that FB is trading at a discount comparatively.

It is also worth noting that FB currently has a PEG ratio of 1.4. 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. The Internet - Services was holding an average PEG ratio of 1.78 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 111, which puts it in the top 44% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

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