A strong stock as of late has been Roblox (RBLX). Shares have been marching higher, with the stock up 15.4% over the past month. The stock hit a new 52-week high of $108 in the previous session. Roblox has gained 86.2% since the start of the year compared to the 11.7% gain for the Zacks Consumer Discretionary sector and the 14.1% return for the Zacks Gaming industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 1, 2025, Roblox reported EPS of -$0.32 versus consensus estimate of -$0.41 while it beat the consensus revenue estimate by 5.35%.
For the current fiscal year, Roblox is expected to post earnings of -$1.38 per share on $5.43 in revenues. This represents a 4.17% change in EPS on a 24.22% change in revenues. For the next fiscal year, the company is expected to earn -$1.14 per share on $6.52 in revenues. This represents a year-over-year change of 17.03% and 20.17%, respectively.
Valuation Metrics
While Roblox has moved to its 52-week high over the past few weeks, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Roblox has a Value Score of F. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Roblox currently has a Zacks Rank of #2 (Buy) thanks to a solid earnings estimate revision trend.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Roblox fits the bill. Thus, it seems as though Roblox shares could have a bit more room to run in the near term.
How Does RBLX Stack Up to the Competition?
Shares of RBLX have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Electronic Arts Inc. (EA). EA has a Zacks Rank of #2 (Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of A.
Earnings were strong last quarter. Electronic Arts Inc. beat our consensus estimate by 38.74%, and for the current fiscal year, EA is expected to post earnings of $8.22 per share on revenue of $7.88 billion.
Shares of Electronic Arts Inc. have gained 4.5% over the past month, and currently trade at a forward P/E of 18.68X and a P/CF of 24.45X.
The Gaming industry is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for RBLX and EA, even beyond their own solid fundamental situation.
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Roblox Corporation (RBLX): Free Stock Analysis Report Electronic Arts Inc. (EA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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