Momo Inc. (MOMO) Gains But Lags Market: What You Should Know

Momo Inc. (MOMO) closed at $30.69 in the latest trading session, marking a +1.82% move from the prior day. This move lagged the S&P 500's daily gain of 1.86%. Elsewhere, the Dow gained 1.63%, while the tech-heavy Nasdaq added 2.95%.

Prior to today's trading, shares of the company had lost 34.41% over the past month. This has lagged the Computer and Technology sector's loss of 11.34% and the S&P 500's loss of 8.85% in that time.

Investors will be hoping for strength from MOMO as it approaches its next earnings release, which is expected to be November 27, 2018. In that report, analysts expect MOMO to post earnings of $0.54 per share. This would mark year-over-year growth of 20%. Meanwhile, our latest consensus estimate is calling for revenue of $536 million, up 51.22% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.50 per share and revenue of $2.05 billion, which would represent changes of +41.24% and +55.36%, respectively, from the prior year.

Any recent changes to analyst estimates for MOMO should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

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. The Zacks Consensus EPS estimate has moved 0.15% lower within the past month. MOMO is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MOMO has a Forward P/E ratio of 12.04 right now. Its industry sports an average Forward P/E of 28.99, so we one might conclude that MOMO is trading at a discount comparatively.

We can also see that MOMO currently has a PEG ratio of 0.52. 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. Internet - Software and Services stocks are, on average, holding a PEG ratio of 2.26 based on yesterday's closing prices.

The Internet - Software and Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 79, putting it in the top 31% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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