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Snap (SNAP) Stock Sinks As Market Gains: Here's Why

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Snap (SNAP - Free Report) ended the recent trading session at $15.80, demonstrating a -0.25% swing from the preceding day's closing price. This move lagged the S&P 500's daily gain of 0.25%. Meanwhile, the Dow gained 0.15%, and the Nasdaq, a tech-heavy index, added 0.03%.

Shares of the company behind Snapchat witnessed a loss of 3.59% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 8.7% and the S&P 500's gain of 3.34%.

The upcoming earnings release of Snap will be of great interest to investors. The company's earnings per share (EPS) are projected to be $0.02, reflecting a 200% increase from the same quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $1.25 billion, reflecting a 16.75% rise from the equivalent quarter last year.

SNAP's full-year Zacks Consensus Estimates are calling for earnings of $0.23 per share and revenue of $5.34 billion. These results would represent year-over-year changes of +155.56% and +15.97%, respectively.

Any recent changes to analyst estimates for Snap should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Snap presently features a Zacks Rank of #2 (Buy).

Investors should also note Snap's current valuation metrics, including its Forward P/E ratio of 68.03. Its industry sports an average Forward P/E of 29.7, so one might conclude that Snap is trading at a premium comparatively.

The Internet - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 73, this industry ranks in the top 29% of all industries, numbering over 250.

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.

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