"We rate ZYNGA INC (ZNGA) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself."
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- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 1580.3% when compared to the same quarter one year ago, falling from $4.13 million to -$61.18 million.
- Net operating cash flow has significantly decreased to -$24.25 million or 191.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- This stock has managed to decline in share value by 0.30% over the past twelve months. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, ZYNGA INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ZYNGA INC is currently very high, coming in at 83.95%. Regardless of ZNGA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ZNGA's net profit margin of -36.41% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: ZNGA Ratings Report
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