Facebook (FB) Gains As Market Dips: What You Should Know

Zacks Equity Research

Facebook (FB) closed at $168.83 in the latest trading session, marking a +1.98% move from the prior day. This move outpaced the S&P 500's daily loss of 0.16%. Elsewhere, the Dow lost 0.12%, while the tech-heavy Nasdaq lost 0.33%.

Coming into today, shares of the social media company had lost 2.33% in the past month. In that same time, the Computer and Technology sector lost 7.54%, while the S&P 500 lost 10.5%.

FB will be looking to display strength as it nears its next earnings release. On that day, FB is projected to report earnings of $1.79 per share, which would represent year-over-year growth of 110.59%. Meanwhile, our latest consensus estimate is calling for revenue of $17.69 billion, up 17.3% from the prior-year quarter.

FB's full-year Zacks Consensus Estimates are calling for earnings of $7.80 per share and revenue of $78.43 billion. These results would represent year-over-year changes of +21.31% and +10.93%, respectively.

Any recent changes to analyst estimates for FB should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 16.11% lower within the past month. FB is currently a Zacks Rank #3 (Hold).

Looking at its valuation, FB is holding a Forward P/E ratio of 21.22. Its industry sports an average Forward P/E of 25.37, so we one might conclude that FB is trading at a discount comparatively.

Investors should also note that FB has a PEG ratio of 1.07 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. The Internet - Services industry currently had an average PEG ratio of 2.16 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 33, which puts it in the top 13% 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.

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


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