Trade-Ideas: Zynga (ZNGA) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Zynga ( ZNGA) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Zynga as such a stock due to the following factors:

  • ZNGA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $100.4 million.
  • ZNGA has traded 12.9 million shares today.
  • ZNGA is down 3.2% today.
  • ZNGA was up 5.5% yesterday.

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More details on ZNGA:

Zynga Inc. develops, markets, and operates online social games as live services on the Internet, social networking sites, and mobile platforms in the United States and internationally. Currently there is 1 analyst that rates Zynga a buy, 3 analysts rate it a sell, and 19 rate it a hold.

The average volume for Zynga has been 23.8 million shares per day over the past 30 days. Zynga has a market cap of $2.2 billion and is part of the technology sector and computer software & services industry. Shares are up 53% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Zynga as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$0.65 million or 100.96% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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 company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Software industry average, but is greater than that of the S&P 500. The net income increased by 30.7% when compared to the same quarter one year prior, rising from -$22.81 million to -$15.81 million.
  • The revenue fell significantly faster than the industry average of 5.7%. Since the same quarter one year prior, revenues fell by 30.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for ZYNGA INC is currently very high, coming in at 86.90%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.84% is in-line with the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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