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Software company DocuSign’s (DOCU) shares lost nearly 42% in price on December 3 and hit their 52-week low of $131.51. But can the stock rebound based on the company’s dominant market position and consistent product and services solutions? Let’s find out.

Cloud-based software provider DocuSign, Inc. (DOCU) is known primarily for its DocuSign eSignature solution and Agreement Cloud. The San Francisco-based company witnessed massive demand for its solutions amid the COVID-19 pandemic with the heightened remote working culture. However, the stock has lost 52.3% in price over the past month to close Friday’s trading session at $135.09, after hitting its 52-week low of $131.51.

DOCU’s total revenue for its fiscal third quarter, ended October 31, 2021, increased 42.4% year-over-year to $545.46 million. Its net loss came in at $5.68 million compared to $58.49 million in the year-ago period. Also, its billings were $565.20 million, up 28% year-over-year. However, the stock declined by 42% on Friday, its biggest retreat ever, amid concerns of slowing demand for e-signatures as businesses return to their offices.

The company’s billings and revenue guidance missed expectations. Its $557 million – $563 million fourth-quarter revenue projection was below Wall Street’s expectations. Consequently, several analysts downgraded DOCU’s ratings. In addition, hedge fund’s interest in the stock has declined. So, DOCU’s near-term prospects look uncertain.

Click here to check out our Cloud Computing Industry Report for 2021

Here is what could shape DOCU’s performance in the near term:

Consistent Product and Services Innovations

In November 2021, DOCU enhanced DocuSign Notary so administrators could manage the availability of first-party notaries. The company announced an expansion of its global strategic partnership with salesforce.com, inc. (CRM) on October 27 to build new solutions to improve the customer experience of preparing, signing, and managing agreements, drive faster ROI, and increase collaboration among organizations with Slack functionality.

Ongoing Investigations

Several law firms have launched investigations against DOCU on possible securities law violations in connection with its management’s statements about its growth prospects. On September 2, DOCU and its management assured investors of continued billings and revenue growth. However, on December 2, these statements were brought into question when the company announced that it sustained a significant deceleration in billings growth during its fiscal third quarter that would continue into the fourth quarter.

Stretched Valuation

In terms of forward non-GAAP P/E, DOCU’s 68.57x is 185.2% higher than the 24.04x industry average. The stock’s 57.47x forward EV/EBITDA  is 265.5% higher than the 15.72x industry average. Furthermore, its 12.77x forward EV/S and 12.73x P/S are higher than the 4.03x and 3.94x industry averages.

POWR Ratings Reflect Uncertain Near-Term Prospects

DOCU has an overall C rating, which equates to Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. DOCU has a C grade for Sentiment, which is in sync with unfavorable analysts’ sentiment.

The stock has a C grade for Momentum, consistent with its 52.3% loss over the past month and 56.4% over the past three months.

And DOCU has a D grade for Value, which is in sync with its higher-than-industry valuation ratios.

DOCU is ranked #61 of 169 stocks in the Software – Application industry. Also, click here to see the additional POWR Ratings for DOCU (Stability, Growth, and Quality).

Bottom Line

DOCU is a well-known company with more than 1,000,000 customers and hundreds of millions of users across 180 countries that use DocuSign to accelerate doing business. However, the stock is currently trading below its 50-day and 200-day moving averages of $260.96 and $251.36, respectively, indicating a downtrend. Also, the company could continue to be impacted as the demand for its solutions could decline as economies gradually recover and organizations prefer in-person meetings. So, we think it could be wise to wait before scooping up its shares.

How Does DocuSign (DOCU) Stack Up Against its Peers?

While DOCU has an overall POWR Rating of C, one might want to consider investing in Software – Application stocks with an A (Strong Buy) rating, such as Commvault Systems, Inc. (CVLT), Open Text Corporation (OTEX), and Progress Software Corporation (PRGS).

Click here to check out our Software Industry Report for 2021

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DOCU shares fell $1.70 (-1.26%) in premarket trading Monday. Year-to-date, DOCU has declined -39.23%, versus a 22.46% rise in the benchmark S&P 500 index during the same period.

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About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.

More…

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Here are four stocks with buy rank and strong value characteristics for investors to consider today, December 6th:

Guild Holdings Company GHLD: This mortgage company has a Zacks Rank #1 (Strong Buy), and seen the Zacks Consensus Estimate for its current year earnings rising 28.2% over the last 60 days.

Guild Holdings has a price-to-earnings ratio (P/E) of 3.56, compared with 10.20 for the industry. The company possesses a Value Score of A.

Textainer Group Holdings Limited TGH: This company that purchases, owns, manages, leases, and disposes a fleet of intermodal containers has a Zacks Rank #1, and seen the Zacks Consensus Estimate for its current year earnings rising 8.4% over the last 60 days.

Textainer Group has a price-to-earnings ratio (P/E) of 6.15, compared with 14.20 for the industry. The company possesses a Value Score of A.

Merchants Bancorp MBIN: This diversified bank holding company has a Zacks Rank #1, and seen the Zacks Consensus Estimate for its current year earnings rising 6.4% over the last 60 days.

Merchants Bancorp has a price-to-earnings ratio (P/E) of 6.58, compared with 11.60 for the industry. The company possesses a Value Score of A.

Penske Automotive Group, Inc. PAG: This diversified transportation services company has a Zacks Rank #1, and seen the Zacks Consensus Estimate for its current year earnings rising 16.5% over the last 60 days.

Penske Automotive has a price-to-earnings ratio (P/E) of 6.97, compared with 8.40 for the industry. The company possesses a Value Score of A.

See the full list of top ranked stocks here.

Learn more about the Value score and how it is calculated here.

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Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the Invesco Dividend Achievers ETF (PFM), a passively managed exchange traded fund launched on 09/15/2005.

The fund is sponsored by Invesco. It has amassed assets over $696.59 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

Costs

Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.53%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 1.67%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector–about 17.70% of the portfolio. Healthcare and Financials round out the top three.

Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 4.33% of total assets, followed by Jpmorgan Chase & Co (JPM) and Unitedhealth Group Inc (UNH).

The top 10 holdings account for about 26.31% of total assets under management.

Performance and Risk

PFM seeks to match the performance of the NASDAQ US Broad Dividend Achievers Index before fees and expenses. The NASDAQ US Broad Dividend Achievers Index is designed to identify a diversified group of dividend-paying companies which have increased their annual dividend for 10 or more consecutive fiscal years.

The ETF has added roughly 18.39% so far this year and is up about 18.60% in the last one year (as of 12/06/2021). In the past 52-week period, it has traded between $32.09 and $39.08.

The ETF has a beta of 0.86 and standard deviation of 20.05% for the trailing three-year period, making it a medium risk choice in the space. With about 350 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Dividend Achievers ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PFM is a reasonable option for those seeking exposure to the Style Box – Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $55.78 billion in assets, Vanguard Value ETF has $86.69 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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Microsoft Corporation (MSFT): Free Stock Analysis Report
 
UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report
 
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The Oshares U.S. Quality Dividend ETF (OUSA) made its debut on 07/14/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box – Large Cap Value category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Managed by Oshares Etfs, OUSA has amassed assets over $739.01 million, making it one of the average sized ETFs in the Style Box – Large Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the FTSE US Qual / Vol / Yield Factor 5% Capped Index.

The FTSE US Qual / Vol / Yield Factor 5% Capped Index measures the performance of publicly-listed large-capitalization and mid-capitalization dividend-paying issuers in the United States.

Cost & Other Expenses

Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.48% for this ETF, which makes it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 1.68%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 21.90% of the portfolio, the fund has heaviest allocation to the Healthcare sector; Information Technology and Industrials round out the top three.

Looking at individual holdings, Home Depot Inc/the (HD) accounts for about 5.46% of total assets, followed by Microsoft Corp (MSFT) and Johnson & Johnson (JNJ).

OUSA’s top 10 holdings account for about 38.91% of its total assets under management.

Performance and Risk

So far this year, OUSA has added about 18.38%, and is up about 18.93% in the last one year (as of 12/06/2021). During this past 52-week period, the fund has traded between $36.96 and $44.85.

The ETF has a beta of 0.87 and standard deviation of 20.21% for the trailing three-year period, making it a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk.

Alternatives

Oshares U.S. Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box – Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Russell 1000 Value ETF (IWD) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $55.78 billion in assets, Vanguard Value ETF has $86.69 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box – Large Cap Value.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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Oshares U.S. Quality Dividend ETF (OUSA): ETF Research Reports
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
Johnson & Johnson (JNJ): Free Stock Analysis Report
 
The Home Depot, Inc. (HD): Free Stock Analysis Report
 
Vanguard Value ETF (VTV): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
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Looking for broad exposure to the Utilities – Infrastructure segment of the equity market? You should consider the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID), a passively managed exchange traded fund launched on 11/16/2009.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities – Infrastructure is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $765.69 million, making it one of the average sized ETFs attempting to match the performance of the Utilities – Infrastructure segment of the equity market. GRID seeks to match the performance of the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index before fees and expenses.

The NASDAQ OMX Clean Edge Smart Grid Infrastructure Index includes companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and enabling software used by the smart grid infrastructure sector.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.70%, making it the most expensive product in the space.

It has a 12-month trailing dividend yield of 0.76%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Aptiv Plc (APTV) accounts for about 8.95% of total assets, followed by Johnson Controls International Plc (JCI) and Eaton Corporation Plc (ETN).

The top 10 holdings account for about 60.13% of total assets under management.

Performance and Risk

So far this year, GRID has gained about 24.90%, and is up roughly 33.84% in the last one year (as of 12/06/2021). During this past 52-week period, the fund has traded between $76.37 and $105.89.

The ETF has a beta of 1.18 and standard deviation of 27.39% for the trailing three-year period, making it a high risk choice in the space. With about 72 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, GRID is a great option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

IShares Global Infrastructure ETF (IGF) tracks S&P Global Infrastructure Index and the Global X U.S. Infrastructure Development ETF (PAVE) tracks INDXX U.S. Infrastructure Development Index. IShares Global Infrastructure ETF has $3.05 billion in assets, Global X U.S. Infrastructure Development ETF has $5.26 billion. IGF has an expense ratio of 0.43% and PAVE charges 0.47%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

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First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID): ETF Research Reports
 
Johnson Controls International plc (JCI): Free Stock Analysis Report
 
Eaton Corporation, PLC (ETN): Free Stock Analysis Report
 
iShares Global Infrastructure ETF (IGF): ETF Research Reports
 
Global X U.S. Infrastructure Development ETF (PAVE): ETF Research Reports
 
Aptiv PLC (APTV): Free Stock Analysis Report
 
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I last wrote about Twitter TWTR as the Bear of the Day on November 1 when shares were trading near $55.
The theme after their Q3 report in late October was a wicked earnings deterioration where analysts reacted with a 58% clear-cutting of EPS estimates from $0.94 to $0.39, mostly based on the big profit miss for the quarter.
Since then, the downward revisions have kept coming with another 64% walloping to take this year’s consensus down to just $0.14.
More importantly for the forward outlook, next year’s EPS consensus has slipped 27% from $1.22 to $0.89.
By Thanksgiving, Twitter shares had slipped to $47. But insult to injury, on Monday the 29th, CEO Jack Dorsey announced he was stepping down and shares actually rallied briefly on the news to $52.
The insta-rally didn’t last but it was sort of reminiscent of when Steve Ballmer left Microsoft.
Analysts React Again
While few analysts would attribute (or admit if they did) their earnings forecasts to whether or not @Jack is behind the wheel, several did provided updates last week.
There were a few that did comment directly on the departure…
Jefferies analyst Brent Thill said he views Jack Dorsey’s resignation and the appointments of CTO Parag Agrawal as CEO and Bret Taylor as Chairman of the Board as positives for the stock and a “step in the right direction.”

While he believes the new leadership could reinvigorate growth and help deliver on management’s initial FY23 goals, he still sees “plenty of hurdles to clear” for Twitter to improve on its sluggish pace of ad product innovation and reverse its stock underperformance relative to peers. Thill has a Hold rating and $70 price target on Twitter shares.
Wedbush analyst Ygal Arounian lowered the firm’s price target on Twitter to $52 from $69 and kept a Neutral rating on the shares after the company announced that co-founder and CEO Jack Dorsey will resign effective immediately and will be replaced by CTO Parag Agrawal.

Dorsey’s contributions to Twitter are undeniable and as a founder and CEO he continued to play a critical role, so his stepping down is “no minor point” in the analyst’s view.
Citi analyst Jason Bazinet lowered his price target on Twitter to $47 from $60 and kept a Neutral rating on the shares. The analyst reduced Twitter’s target multiple to more closely align with the company’s peer group.

Bazinet believes the stock’s current valuation reflects much of the revenue and margin opportunity over the next few years.
Piper Sandler analyst Thomas Champion lowered his price target on Twitter to $54 from $70 on Thursday and reiterated a Neutral rating on the shares after conducting a survey of 1,500 people in the United States to better understand the company’s usage.

Overall, user growth in the U.S. may be hampered by churn while advertising relevancy turned out better than expected and subscriptions “look appealing to a narrow audience.”

The survey suggests Twitter’s user growth opportunity in the U.S. remains as 60% of respondents have not used the platform, says the analyst. However, he believes that with gross adds and churn evenly matched in the most recent period, the “setup for Twitter’s growth looks challenging.”
Also on Thursday, UBS analyst Lloyd Walmsley assumed coverage of Twitter with a Neutral rating and price target of $50, down from $69. The company’s 2023 targets look increasingly like “a stretch” and will serve as an overhang on shares the analyst noted, though he also “sees evidence” that Twitter is executing on new product development at a faster clip than historical levels.

Walmsley concluded that consensus estimates look ambitious, but risk-reward appears balanced on the stock.
Large Twitter Investors Speak Out
In my November 1 article, I noted how Cathie Wood’s ARK Invest firm was buying TWTR shares all the way down before and after earnings from as high as $63.
Well on Tuesday, ARK bought another 1.1 million shares of TWTR at an average price under $45. This was not really a surprise given their enthusiasm for the company. But they didn’t buy anymore the rest of the week on new 52-week lows under $42, which was curious to me.
But another big bull made his views known. Elliott Investment Management chief Paul Singer made it a point to let his lieutenants publicly announce that they are “confident” in the Twitter leadership. As a very successful activist investor, it’s possible he was behind the move all the time.
Elliott released the following statement on behalf of Managing Partner Jesse Cohn and Senior Portfolio Manager Marc Steinberg regarding the leadership changes announced at Twitter…
Twitter is the leading global medium for real-time conversation and engagement, and our collaboration with Jack and the company for the past two years has been productive and effective. Twitter is now executing against an ambitious multi-year plan to dramatically increase the company’s reach and value, and we look forward to the next chapter of Twitter’s story. Having gotten to know both incoming Chairman Bret Taylor and incoming CEO Parag Agrawal, we are confident that they are the right leaders for Twitter at this pivotal moment for the company.
My Bottom Line on TWTR
I love the platform and its diverse “communities of knowledge” that encourage learning, collaboration, and often career opportunities across business, investing, science, education, and medicine. It should have a “long tail” existence and be able to monetize many aspects for years to come.
With 37% topline growth this year to breach $5 billion and a projected 22% advance next year to cross $6.2 billion, the stock now trades attractively at under 6 times sales. As soon as EPS estimates stabilize and start heading back up, TWTR will be a buy again.
The Zacks Rank will let you know.

Investor Alert: Legal Marijuana Looking for big gains?

Now is the time to get in on a young industry primed to skyrocket from $13.5 billion in 2021 to an expected $70.6 billion by 2028.

After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could kick start an even greater bonanza for investors. Zacks Investment Research has recently closed pot stocks that have shot up as high as +147.0%.

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Levi Strauss (LEVI) closed the most recent trading day at $25.20, moving -0.71% from the previous trading session. This move was narrower than the S&P 500’s daily loss of 0.85%. Meanwhile, the Dow lost 0.17%, and the Nasdaq, a tech-heavy index, lost 0.05%.

Prior to today’s trading, shares of the jeans maker had lost 5.93% over the past month. This has lagged the Retail-Wholesale sector’s loss of 2.48% and the S&P 500’s loss of 0.97% in that time.

Wall Street will be looking for positivity from Levi Strauss as it approaches its next earnings report date. The company is expected to report EPS of $0.40, up 100% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.68 billion, up 21.14% from the year-ago period.

Any recent changes to analyst estimates for Levi Strauss should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Levi Strauss is currently a Zacks Rank #2 (Buy).

Valuation is also important, so investors should note that Levi Strauss has a Forward P/E ratio of 16.79 right now. Its industry sports an average Forward P/E of 11.96, so we one might conclude that Levi Strauss is trading at a premium comparatively.

The Retail – Apparel and Shoes industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 73, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank includes is listed in order 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.

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

Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.

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In the latest trading session, Canon (CAJ) closed at $22.46, marking a +1.26% move from the previous day. The stock outpaced the S&P 500’s daily loss of 0.85%. Elsewhere, the Dow lost 0.17%, while the tech-heavy Nasdaq lost 0.05%.

Coming into today, shares of the office machine company had lost 4.15% in the past month. In that same time, the Computer and Technology sector lost 0.5%, while the S&P 500 lost 0.97%.

Investors will be hoping for strength from Canon as it approaches its next earnings release. The company is expected to report EPS of $0.42, down 14.29% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $9.26 billion, down 2.45% from the prior-year quarter.

CAJ’s full-year Zacks Consensus Estimates are calling for earnings of $1.74 per share and revenue of $32.62 billion. These results would represent year-over-year changes of +128.95% and +8.48%, respectively.

Any recent changes to analyst estimates for Canon should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.95% lower within the past month. Canon currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Canon has a Forward P/E ratio of 12.75 right now. Its industry sports an average Forward P/E of 16.32, so we one might conclude that Canon is trading at a discount comparatively.

Meanwhile, CAJ’s PEG ratio is currently 12.75. 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. Office Automation and Equipment stocks are, on average, holding a PEG ratio of 12.75 based on yesterday’s closing prices.

The Office Automation and Equipment industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 73, putting it in the top 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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Canon, Inc. (CAJ): Free Stock Analysis Report
 
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