In the latest trading session, Spotify (SPOT) closed at $718.94, marking a -2.65% move from the previous day. This move lagged the S&P 500's daily loss of 0.55%. Elsewhere, the Dow saw a downswing of 0.19%, while the tech-heavy Nasdaq depreciated by 0.95%.
Prior to today's trading, shares of the music-streaming service operator had gained 6.3% lagged the Computer and Technology sector's gain of 9.88% and outpaced the S&P 500's gain of 3.64%.
The investment community will be paying close attention to the earnings performance of Spotify in its upcoming release. The company is predicted to post an EPS of $1.96, indicating a 23.27% growth compared to the equivalent quarter last year. In the meantime, our current consensus estimate forecasts the revenue to be $4.88 billion, indicating a 11.37% growth compared to the corresponding quarter of the prior year.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $5.77 per share and revenue of $19.9 billion. These totals would mark changes of -3.03% and +17.4%, respectively, from last year.
Investors should also take note of any recent adjustments to analyst estimates for Spotify. These revisions typically reflect the latest short-term business trends, which can change frequently. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.
Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. 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 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Spotify is currently a Zacks Rank #3 (Hold).
With respect to valuation, Spotify is currently being traded at a Forward P/E ratio of 128. Its industry sports an average Forward P/E of 32.31, so one might conclude that Spotify is trading at a premium comparatively.
Also, we should mention that SPOT has a PEG ratio of 3.18. 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. SPOT's industry had an average PEG ratio of 2.32 as of yesterday's close.
The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 70, putting it in the top 29% 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.
Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.
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Spotify Technology (SPOT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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