Pinterest (PINS) Dips More Than Broader Market: What You Should Know

Pinterest (PINS) shares closed down 1.93% at $34.54, underperforming the S&P 500 on the day, but have gained 8.14% in the past month. The company's upcoming earnings report is expected to show a 17.24% EPS increase to $0.34 and a 13.99% revenue increase to $973.08 million. Currently, Pinterest holds a Zacks Rank of #3 (Hold) with a forward P/E ratio of 57.9, a premium to its industry, and a PEG ratio of 1.74, while the Internet - Software industry is in the top 20% of all Zacks-ranked industries.

Analysis

Pinterest (PINS) shares recently closed at $34.54, a 1.93% decline, underperforming the S&P 500's 0.84% loss, the Dow's 0.7% drop, and the Nasdaq's 0.91% decrease on the same day. Despite this daily underperformance, PINS has demonstrated notable strength over the past month, achieving an 8.14% gain, which significantly outpaced the flat performance of the Computer and Technology sector and the S&P 500's 1.44% rise. The market is closely watching for its upcoming earnings, where Pinterest is anticipated to report an EPS of $0.34, marking a 17.24% year-over-year increase, alongside revenue of $973.08 million, up 13.99% from the prior year's corresponding quarter. For the full fiscal year, Zacks Consensus Estimates project substantial growth, with earnings forecasted at $1.84 per share (+42.64% YoY) and revenue at $4.15 billion (+13.8% YoY). Supporting an optimistic outlook, the Zacks Consensus EPS estimate has risen by 0.91% over the last 30 days, reflecting positive analyst sentiment. Currently, Pinterest holds a Zacks Rank of #3 (Hold). In terms of valuation, PINS trades at a Forward P/E ratio of 57.9, a premium to its industry's average of 45.44. However, its PEG ratio of 1.74 is considerably more favorable than the Internet - Software industry's average PEG of 3.23, suggesting growth expectations might be more reasonably priced. The company operates within the Internet - Software industry, which boasts a strong Zacks Industry Rank of 47, placing it in the top 20% of over 250 industries. Overall sentiment regarding Pinterest is moderately positive with an optimistic tone, according to provided signals.

Key Decisions for Investors

• Investors should closely monitor Pinterest's upcoming earnings report to ascertain if the company meets or exceeds the anticipated 17.24% EPS growth and 13.99% revenue growth, which is crucial for justifying its current valuation.
• Consider the recent 8.14% monthly share price appreciation and positive analyst EPS estimate revisions against the backdrop of its Zacks Rank #3 (Hold) status and a high Forward P/E ratio of 57.9.
• Evaluate the PEG ratio of 1.74, which is significantly lower than its industry average, as a potential indicator that future earnings growth may not be fully priced in, offering a counterpoint to the high P/E.
• Acknowledge the supportive macro environment from operating within a top-performing industry (Zacks Industry Rank top 20%), while remaining vigilant about PINS-specific execution on its growth strategy and path to profitability implied by annual forecasts.