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Zendesk (ZEN) Gains But Lags Market: What You Should Know

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In the latest trading session, Zendesk (ZEN - Free Report) closed at $81.70, marking a +0.37% move from the previous day. This change lagged the S&P 500's 0.7% gain on the day. At the same time, the Dow added 0.58%, and the tech-heavy Nasdaq gained 0.69%.

Heading into today, shares of the customer-service software maker had gained 3.73% over the past month, outpacing the Computer and Technology sector's gain of 3.68% and the S&P 500's gain of 1.95% in that time.

Investors will be hoping for strength from ZEN as it approaches its next earnings release. On that day, ZEN is projected to report earnings of $0.03 per share, which would represent year-over-year growth of 50%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $179.60 million, up 38.38% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.30 per share and revenue of $803 million, which would represent changes of +36.36% and +34.11%, respectively, from the prior year.

Any recent changes to analyst estimates for ZEN should also be noted by investors. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ZEN currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, ZEN is holding a Forward P/E ratio of 275.57. This valuation marks a premium compared to its industry's average Forward P/E of 58.17.

Also, we should mention that ZEN has a PEG ratio of 9.34. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZEN's industry had an average PEG ratio of 2.93 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 71, putting it in the top 28% 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 ZEN in the coming trading sessions, be sure to utilize Zacks.com.




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