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Zynga (ZNGA) Stock Sinks As Market Gains: What You Should Know

Zynga (ZNGA) closed the most recent trading day at $10.38, moving -0.57% from the previous trading session. This change lagged the S&P 500's 1.05% gain on the day. At the same time, the Dow added 1.44%, and the tech-heavy Nasdaq gained 0.66%.

Heading into today, shares of the maker of "FarmVille" and other online games had gained 13.73% over the past month, outpacing the Consumer Discretionary sector's loss of 3.29% and the S&P 500's loss of 1.56% in that time.

Wall Street will be looking for positivity from ZNGA as it approaches its next earnings report date. The company is expected to report EPS of $0.06, up 250% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $502.94 million, up 33.63% from the year-ago period.

ZNGA's full-year Zacks Consensus Estimates are calling for earnings of $0.29 per share and revenue of $1.85 billion. These results would represent year-over-year changes of +2800% and +18.51%, respectively.

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Investors might also notice recent changes to analyst estimates for ZNGA. These revisions help to show the ever-changing nature of near-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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. ZNGA currently has a Zacks Rank of #2 (Buy).

In terms of valuation, ZNGA is currently trading at a Forward P/E ratio of 36.21. This valuation marks a premium compared to its industry's average Forward P/E of 25.57.

Investors should also note that ZNGA has a PEG ratio of 2.9 right now. 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. Gaming stocks are, on average, holding a PEG ratio of 2.06 based on yesterday's closing prices.

The Gaming industry is part of the Consumer Discretionary sector. This group has a Zacks Industry Rank of 89, putting it in the top 36% 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 ZNGA in the coming trading sessions, be sure to utilize Zacks.com.


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