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

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Zynga (ZNGA - Free Report) closed the most recent trading day at $10.28, moving +1.18% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.65%. At the same time, the Dow added 0.53%, and the tech-heavy Nasdaq gained 1.05%.

Heading into today, shares of the maker of "FarmVille" and other online games had lost 15.19% over the past month, lagging the Consumer Discretionary sector's gain of 2.82% and the S&P 500's gain of 0.36% in that time.

ZNGA will be looking to display strength as it nears its next earnings release. In that report, analysts expect ZNGA to post earnings of $0.08 per share. This would mark year-over-year growth of 700%. Meanwhile, our latest consensus estimate is calling for revenue of $686.49 million, up 61.57% from the prior-year quarter.

ZNGA's full-year Zacks Consensus Estimates are calling for earnings of $0.38 per share and revenue of $2.84 billion. These results would represent year-over-year changes of +442.86% and +25.04%, respectively.

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. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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. The Zacks Consensus EPS estimate has moved 40.98% lower within the past month. ZNGA currently has a Zacks Rank of #5 (Strong Sell).

In terms of valuation, ZNGA is currently trading at a Forward P/E ratio of 26.95. This represents a discount compared to its industry's average Forward P/E of 29.86.

It is also worth noting that ZNGA currently has a PEG ratio of 1.81. 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. Gaming stocks are, on average, holding a PEG ratio of 1.71 based on yesterday's closing prices.

The Gaming industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 204, putting it in the bottom 20% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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