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

Zacks Equity Research
Tower (TOWR) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Twitter (TWTR) closed the most recent trading day at $32.62, moving +0.15% from the previous trading session. This move lagged the S&P 500's daily gain of 1.09%. Elsewhere, the Dow gained 0.84%, while the tech-heavy Nasdaq added 1.42%.

Coming into today, shares of the short messaging service had gained 3.83% in the past month. In that same time, the Computer and Technology sector gained 4.97%, while the S&P 500 gained 1.18%.

Investors will be hoping for strength from TWTR as it approaches its next earnings release. The company is expected to report EPS of $0.14, down 12.5% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $773.26 million, up 16.3% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.84 per share and revenue of $3.48 billion. These totals would mark changes of -2.33% and +14.43%, respectively, from last year.

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

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. Within the past 30 days, our consensus EPS projection has moved 0.56% lower. TWTR is currently a Zacks Rank #3 (Hold).

Looking at its valuation, TWTR is holding a Forward P/E ratio of 39.01. For comparison, its industry has an average Forward P/E of 57.74, which means TWTR is trading at a discount to the group.

We can also see that TWTR currently has a PEG ratio of 1.62. 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 3.35 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 54, putting it in the top 22% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow TWTR in the coming trading sessions, be sure to utilize Zacks.com.


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