DraftKings (DKNG) Declines More Than Market: Some Information for Investors

DraftKings (DKNG) closed at $20.72 in the latest trading session, marking a -2.59% move from the prior day. The stock fell short of the S&P 500, which registered a loss of 1.67% for the day. Meanwhile, the Dow lost 1.73%, and the Nasdaq, a tech-heavy index, lost 2.15%.

The company's shares have seen a decrease of 9.45% over the last month, not keeping up with the Consumer Discretionary sector's loss of 6.43% and the S&P 500's loss of 6.15%.

Market participants will be closely following the financial results of DraftKings in its upcoming release. The company is predicted to post an EPS of $0.23, indicating a 91.67% growth compared to the equivalent quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.67 billion, up 18.68% from the year-ago period.

DKNG's full-year Zacks Consensus Estimates are calling for earnings of $1.15 per share and revenue of $6.81 billion. These results would represent year-over-year changes of +74.24% and +12.5%, respectively.

Investors should also take note of any recent adjustments to analyst estimates for DraftKings. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 33.14% decrease. DraftKings currently has a Zacks Rank of #5 (Strong Sell).

From a valuation perspective, DraftKings is currently exchanging hands at a Forward P/E ratio of 18.46. This indicates a premium in contrast to its industry's Forward P/E of 16.22.

Meanwhile, DKNG's PEG ratio is currently 0.42. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. DKNG's industry had an average PEG ratio of 1.45 as of yesterday's close.

The Gaming industry is part of the Consumer Discretionary sector. At present, this industry carries a Zacks Industry Rank of 156, placing it within the bottom 37% of over 250 industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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