Here’s what to know beyond why Pinterest, Inc. (PINS) is a trending stock
pinterest (PINS) has been one of the most searched stocks on Zacks.com lately. So, you might want to consider some of the facts that could shape the stock’s performance in the short term.
Shares of this digital bulletin board and shopping tools company have returned +12.7% over the past month compared to the -3.3% change in the Zacks S&P 500 composite. Zacks Internet – Software, which owns Pinterest, lost 6.7% over the period. Now the key question is: where could the stock be heading in the near term?
While press releases or rumors about a substantial change in a company’s trading outlook usually “trend” its stock and cause an immediate price change, there are always fundamental facts that ultimately dominate the take. purchase and retention decision.
Revisions to earnings estimates
Rather than focusing on anything else, at Zacks we prioritize assessing change in a company’s earnings projection. Indeed, we believe that the fair value of its shares is determined by the present value of its future earnings streams.
Our analysis is primarily based on how sell-side analysts covering the stock revise their earnings estimates to reflect the latest trading trends. When a company’s earnings estimates increase, the fair value of its stock also increases. And when the fair value of a stock is higher than its current market price, investors tend to buy the stock, causing its price to rise. For this reason, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term movements in stock prices.
For the current quarter, Pinterest is expected to post earnings of $0.05 per share, indicating a change of -82.1% from the prior year quarter. The Zacks consensus estimate has remained unchanged for the past 30 days.
For the current year, the consensus earnings estimate of $0.53 indicates a change of -53.1% from the prior year. Over the past 30 days, this estimate has remained unchanged.
For the next fiscal year, the consensus earnings estimate of $0.69 indicates a +29.7% change from what Pinterest is expected to report a year ago. Over the past month, the estimate has remained unchanged.
With a strong externally audited track record, our proprietary stock rating tool, Zacks Rank, provides a more conclusive picture of a stock’s price direction in the short term, as it effectively harnesses the power of earnings estimate revisions. . Due to the magnitude of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Pinterest is ranked Zacks Rank #3 (Hold).
The chart below shows the evolution of the company’s consensus 12-month EPS estimate:
12 month EPS
Revenue Growth Forecasts
Although earnings growth is arguably the most superior indicator of a company’s financial health, nothing as such happens if a company is unable to increase its revenue. After all, it is almost impossible for a company to increase its profits for an extended period of time without increasing its revenue. It is therefore important to know the potential revenue growth of a company.
In the case of Pinterest, the consensus sales estimate of $664.97 million for the current quarter indicates a year-over-year change of +5.1%. Estimates of $2.8 billion and $3.32 billion for the current and next fiscal year indicate variations of +8.5% and +18.8%, respectively.
Latest reported results and history of surprises
Pinterest reported revenue of $665.93 million in the last quarter, representing a +8.6% year-over-year change. EPS of $0.11 for the same period versus $0.25 a year ago.
Compared to Zacks’ consensus estimate of $660.48 million, reported revenue is a surprise of +0.83%. The EPS surprise was -35.29%.
In the past four quarters, Pinterest has exceeded consensus EPS estimates three times. The company has exceeded consensus earnings estimates every time during this period.
No investment decision can be effective without considering the valuation of a stock. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of its future price performance.
Compare the present value of a company’s valuation multiples, such as its price/earnings (P/E), price/sales (P/S), and price/cash flow (P/CF), to its own historical values help determine whether its stock is fairly priced, overvalued or undervalued, while comparing the company against its peers on these metrics gives a good idea of the reasonableness of its price.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to traditional and unconventional valuation metrics to rank stocks from A to F (an A is better than a B; a B is better than a C; and so on), is quite useful in determining whether a stock is overvalued, correctly priced, or temporarily undervalued.
Pinterest is rated D on this front, indicating that it trades at a premium to its peers. Click here to see values for some of the rating metrics that led to this rating.
The facts discussed here and plenty of other information about Zacks.com might help determine whether or not it’s worth paying attention to the market buzz about Pinterest. However, its No. 3 Zacks ranking suggests it could perform in line with the broader market in the near term.
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Pinterest, Inc. (PINS): Free Stock Analytics Report
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