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Twitter (TWTR) Gains But Lags Market: What You Should Know

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In the latest trading session, Twitter (TWTR - Free Report) closed at $24.45, marking a +1.71% move from the previous day. This change lagged the S&P 500's 6% gain on the day. Meanwhile, the Dow gained 5.2%, and the Nasdaq, a tech-heavy index, added 6.23%.

Heading into today, shares of the short messaging service had lost 34.87% over the past month, lagging the Computer and Technology sector's loss of 29.17% and the S&P 500's loss of 29.18% in that time.

TWTR will be looking to display strength as it nears its next earnings release. In that report, analysts expect TWTR to post earnings of $0.16 per share. This would mark a year-over-year decline of 23.81%. Our most recent consensus estimate is calling for quarterly revenue of $874.09 million, up 11.08% from the year-ago period.

TWTR's full-year Zacks Consensus Estimates are calling for earnings of $0.89 per share and revenue of $3.96 billion. These results would represent year-over-year changes of -62.45% and +14.43%, respectively.

Investors might also notice recent changes to analyst estimates for TWTR. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 has moved 0.53% higher. TWTR is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, TWTR is currently trading at a Forward P/E ratio of 26.89. For comparison, its industry has an average Forward P/E of 29.06, which means TWTR is trading at a discount to the group.

We can also see that TWTR currently has a PEG ratio of 0.9. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Software was holding an average PEG ratio of 1.85 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 108, putting it in the top 43% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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 Zacks.com.


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