Why the Market Dipped But Twilio (TWLO) Gained Today

In the latest trading session, Twilio (TWLO) closed at $231.13, marking a +1.73% move from the previous day. The stock's change was more than the S&P 500's daily loss of 0.59%. Elsewhere, the Dow lost 0.6%, while the tech-heavy Nasdaq lost 0.65%.

The company's shares have seen a decrease of 7.88% over the last month, not keeping up with the Computer and Technology sector's loss of 0.02% and the S&P 500's loss of 1.37%.

The investment community will be paying close attention to the earnings performance of Twilio in its upcoming release. On that day, Twilio is projected to report earnings of $1.45 per share, which would represent year-over-year growth of 16%. At the same time, our most recent consensus estimate is projecting a revenue of $1.51 billion, reflecting a 16.15% rise from the equivalent quarter last year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $5.88 per share and revenue of $5.96 billion, indicating changes of +20.25% and +17.71%, respectively, compared to the previous year.

Investors should also pay attention to any latest changes in analyst estimates for Twilio. Such recent modifications usually signify the changing landscape of near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 1.16% higher. Twilio is currently a Zacks Rank #3 (Hold).

Looking at its valuation, Twilio is holding a Forward P/E ratio of 38.61. Its industry sports an average Forward P/E of 19.88, so one might conclude that Twilio is trading at a premium comparatively.

Also, we should mention that TWLO has a PEG ratio of 2.47. 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. The average PEG ratio for the Internet - Software industry stood at 1.07 at the close of the market yesterday.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 84, putting it in the top 35% of all 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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

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