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Twilio Inc. (TWLO) Gains But Lags Market: What You Should Know

Zacks Equity Research

Twilio Inc. (TWLO) closed at $110.05 in the latest trading session, marking a +0.23% move from the prior day. This move lagged the S&P 500's daily gain of 0.28%. Meanwhile, the Dow gained 0.09%, and the Nasdaq, a tech-heavy index, added 0.4%.

Prior to today's trading, shares of the company had lost 2.44% over the past month. This has lagged the Computer and Technology sector's gain of 0.51% and the S&P 500's loss of 0.14% in that time.

TWLO will be looking to display strength as it nears its next earnings release, which is expected to be October 30, 2019. On that day, TWLO is projected to report earnings of $0.01 per share, which would represent a year-over-year decline of 85.71%. Meanwhile, our latest consensus estimate is calling for revenue of $287.64 million, up 70.3% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.17 per share and revenue of $1.12 billion. These totals would mark changes of +54.55% and +71.66%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for TWLO. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 10.39% lower. TWLO is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, TWLO currently has a Forward P/E ratio of 645.88. For comparison, its industry has an average Forward P/E of 55.56, which means TWLO is trading at a premium to the group.

It is also worth noting that TWLO currently has a PEG ratio of 39.16. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. TWLO's industry had an average PEG ratio of 2.66 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 76, putting it in the top 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within 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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