Airbnb Co., Ltd. (ABNB – (Free Report) recently appeared on the list of most searched stocks on Zacks.com. Therefore, you may need to consider some important factors that may influence the stock's performance in the near future.
The company's stock has returned +0.5% over the past month versus a +1.5% change in the Zacks S&P 500 Composite Index. The Zacks Internet-Content industry, which Airbnb belongs to, has gained 2.3% in this period. The key question here is where the stock is likely to go in the short term.
While media releases and rumors about significant changes in a company's business outlook typically cause its stock to “trend” and lead to immediate price movements, there are some fundamentals that ultimately govern buy-and-hold decisions. There are always facts.
Regarding revisions to performance forecasts
At Zacks, we prioritize evaluating changes in company earnings estimates rather than focusing on anything else. This is because we believe that the fair value of a stock is determined by the present value of its future income stream.
Essentially, we study how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so does the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Airbnb is expected to post earnings of $0.30 per share for the current quarter, representing a year-over-year change of +66.7%. Over the past 30 days, the Zacks Consensus Estimate has changed -0.4%.
The consensus earnings estimate for the current fiscal year of $4.68 represents a -35.4% change from the prior year. This estimate has changed by +0.4% over the past 30 days.
Next year's consensus revenue estimate of $5.40 represents a +15.4% change from the revenue that Airbnb was expected to report a year ago. Over the past month, the forecast has changed by +0.9%.
The Zacks Rank, our proprietary, outside-audited stock evaluation tool, harnesses the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent consensus estimate change, along with three other factors related to the earnings estimate, has led to a Zacks Rank of #3 (Hold) for Airbnb.
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Expected revenue growth rate
Earnings growth is arguably the best indicator of a company's financial health, but nothing will happen if a company can't grow its revenue. After all, it's nearly impossible for a company to increase profits over a long period of time without increasing revenue. Therefore, it's important to know a company's earnings growth potential.
For Airbnb, the current quarter's consensus revenue estimate of $2.06 billion represents a year-over-year change of +13.4%. The current and next fiscal year estimates of $11.07 billion and $12.39 billion represent changes of +11.6% and +11.9%, respectively.
Last reported results and surprising details
Airbnb reported revenue of $2.22 billion in its last reported quarter. This represents a +16.6% year-over-year change. EPS for the same period was $0.76, compared to $0.48 a year ago.
The reported earnings represent a surprise of +2.57% when compared to the Zacks Consensus Estimate of $2.16 billion. EPS surprise was +13.43%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company has surpassed consensus revenue estimates every time during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. To predict a stock's future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects.
The present value of a company's valuation multiples such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), as well as the company's past value, are Comparing a company to its peers based on these parameters will help you see how reasonable its stock price is. You can get a good idea of what
Zacks Value Style Score (part of the Zacks Style Scores system). We pay close attention to both traditional and non-traditional metrics and rate stocks from A to F (A is better than B, B is better than C, and A is better than B. is also very useful in identifying whether a stock is overvalued, well-valued, or temporarily undervalued.
Airbnb is rated D on this score, indicating that it trades at a premium relative to its peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and a lot of other information on Zacks.com, may help you decide whether the market buzz about Airbnb is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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