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

Zacks Equity Research

Facebook (FB) closed at $166.80 in the latest trading session, marking a +0.51% move from the prior day. This change outpaced the S&P 500's 1.6% loss on the day. Elsewhere, the Dow lost 1.84%, while the tech-heavy Nasdaq lost 0.95%.

Prior to today's trading, shares of the social media company had lost 15.52% over the past month. This has lagged the Computer and Technology sector's loss of 9.68% and the S&P 500's loss of 10.82% in that time.

FB will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.55, up 200% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $17.98 billion, up 19.25% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.61 per share and revenue of $81.56 billion. These totals would mark changes of +33.9% and +15.37%, respectively, from last year.

Any recent changes to analyst estimates for FB should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-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. 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.

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. Within the past 30 days, our consensus EPS projection has moved 7.5% lower. FB is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that FB has a Forward P/E ratio of 19.27 right now. Its industry sports an average Forward P/E of 25.5, so we one might conclude that FB is trading at a discount comparatively.

We can also see that FB currently has a PEG ratio of 1.12. 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. FB's industry had an average PEG ratio of 1.93 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 43, which puts it in the top 17% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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