Back to top

Image: Bigstock

Facebook (FB) Gains But Lags Market: What You Should Know

Read MoreHide Full Article

Facebook (FB - Free Report) closed the most recent trading day at $345.96, moving +0.8% from the previous trading session. This change lagged the S&P 500's 1.21% gain on the day.

Heading into today, shares of the social media company had lost 6.84% over the past month, lagging the Computer and Technology sector's gain of 1.28% and the S&P 500's loss of 0.9% in that time.

Investors will be hoping for strength from FB as it approaches its next earnings release. On that day, FB is projected to report earnings of $3.16 per share, which would represent year-over-year growth of 16.61%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $29.34 billion, up 36.65% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $14.10 per share and revenue of $119.22 billion, which would represent changes of +39.74% and +38.69%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for FB. Recent revisions tend to reflect the latest near-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.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. FB is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note FB's current valuation metrics, including its Forward P/E ratio of 24.33. This valuation marks a discount compared to its industry's average Forward P/E of 27.71.

It is also worth noting that FB currently has a PEG ratio of 1.08. 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 4.01 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 171, putting it in the bottom 33% 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.

You can find more information on all of these metrics, and much more, on

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Facebook, Inc. (FB) - free report >>

Published in