Duolingo, Inc. (DUOL) Exceeds Market Returns: Some Facts to Consider

In the latest trading session, Duolingo, Inc. (DUOL) closed at $99.71, marking a +1.69% move from the previous day. The stock outperformed the S&P 500, which registered a daily gain of 1.15%. Meanwhile, the Dow gained 1.38%, and the Nasdaq, a tech-heavy index, added 1.38%.

The company's shares have seen a decrease of 13.18% over the last month, not keeping up with the Business Services sector's loss of 4.78% and the S&P 500's loss of 5.69%.

Market participants will be closely following the financial results of Duolingo, Inc. in its upcoming release. It is anticipated that the company will report an EPS of $0.79, marking a 9.72% rise compared to the same quarter of the previous year. Meanwhile, the latest consensus estimate predicts the revenue to be $288.6 million, indicating a 25.07% increase compared to the same quarter of the previous year.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $3.08 per share and a revenue of $1.21 billion, signifying shifts of -64.06% and +16.53%, respectively, from the last year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Duolingo, Inc. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 23.19% lower. At present, Duolingo, Inc. boasts a Zacks Rank of #5 (Strong Sell).

Digging into valuation, Duolingo, Inc. currently has a Forward P/E ratio of 31.83. For comparison, its industry has an average Forward P/E of 16.05, which means Duolingo, Inc. is trading at a premium to the group.

We can additionally observe that DUOL currently boasts a PEG ratio of 0.68. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. Technology Services stocks are, on average, holding a PEG ratio of 1.35 based on yesterday's closing prices.

The Technology Services industry is part of the Business Services sector. This industry, currently bearing a Zacks Industry Rank of 182, finds itself in the bottom 26% echelons of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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

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