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Facebook (FB) Dips More Than Broader Markets: What You Should Know

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Facebook (FB - Free Report) closed at $170.18 in the latest trading session, marking a -1.84% move from the prior day. This change lagged the S&P 500's 0.09% loss on the day. Elsewhere, the Dow gained 0.03%, while the tech-heavy Nasdaq lost 0.16%.

Prior to today's trading, shares of the social media company had gained 5.67% over the past month. This has outpaced the Computer and Technology sector's gain of 4.21% and the S&P 500's gain of 2.35% in that time.

Wall Street will be looking for positivity from FB as it approaches its next earnings report date. The company is expected to report EPS of $1.63, down 3.55% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $14.96 billion, up 25.03% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.55 per share and revenue of $68.89 billion, which would represent changes of -0.26% and +23.37%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for FB. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Within the past 30 days, our consensus EPS projection remained stagnant. FB is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, FB is currently trading at a Forward P/E ratio of 22.97. Its industry sports an average Forward P/E of 25.31, so we one might conclude that FB is trading at a discount comparatively.

Investors should also note that FB has a PEG ratio of 1.02 right now. 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. The Internet - Services industry currently had an average PEG ratio of 2.73 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 159, putting it in the bottom 38% 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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