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Zynga is slated to release its Q4 and full year 2019 results on February 5, 2020. For full year 2019, Trefis estimates that the company will report:Gross revenues of $1.55 billion, reflecting 60% y-o-y growth, primarily driven by the company's new titles and acquisitions. Our forecast is in line with the average consensus revenue estimate of $1.55 billion. EPS figure will likely grow to $0.27 on an adjusted basis, primarily due to higher revenues, partly offset by higher expenses. Our EPS figure is marginally higher than the average consensus estimate of $0.26.
There could be a possible move in the stock price if the company beats the average consensus figures above. In fact, our forecast indicates that Zynga's valuation is $7 a share, which is 20% above the current price of ~ $6.
(1) Gross Revenues Expected To Grow 60%
Trefis estimates Zynga's 2019 revenues to be $1.55 billion, in line with the average consensus of $1.55 billion.
Online Games $973 Mil (63%)
Advertising & Other $319 Mil (20%)
Net Revenue $1.29 Bil
Change In Deferred Revenue $263 Mil (17%)
TOTAL $1.55 Bil
Consensus $1.55 Bil
Surprise $0.0 Bil
(2) EPS Likely To Grow 12%
Zynga's full year 2019 adjusted earnings per share (EPS) is expected to be $0.27 per Trefis analysis, reflecting 12% y-o-y growth. This is slightly higher than the average consensus estimate of $0.26.
Net Revenues $1.29 Bil
- Total Expenses $1.03 Bil
Net Income $0.26 Bil
÷ Shares Outstanding 942 Mil
(3) Stock Price Estimate ~ 20% Higher Than Market Price
Trefis forecast for Zynga's full year 2019 earnings of $0.27 and P/E multiple of 26.6x works out to a fair value of $7 for Zynga' stock, which is roughly 20% higher than the current market price of around $6, implying 23.4x multiple and average consensus eps of $0.26.
Zynga's Share Price = A x B
Adjusted EPS (A)
P/E Multiple (B)
Detail About Our Forecast For Zynga's (1) Revenues, (2) Adjusted EPS, and (3) P/E Multiple Follow:
(1) Net Revenues Will Likely Surge To $1.3 Billion In 2019
Total net revenues have increased at an average annual rate of 6.2% from $765 million in 2015 to $907 million in 2018, primarily driven by the company's online games. It is expected to see 42% growth in 2019, primarily led by its recent portfolio acquisitions from Gram Games and Small Giant Games.
Net Revenues = A + B
Online Games (A)
Advertising & Others (B)
What About Revenues In 2020?
See Zynga Revenues - How Does Zynga Make Money?
We provide an interactive, in-depth view of the company's revenues along with our forecasts.
Key for 2020: Zynga's net revenue will likely grow at an average rate of 27% over 2019-2020, led by the company's new titles, and the impact of recent acquisitions.
What About Expenses And Earnings In 2020?
See Zynga Expenses - How Does Zynga Spend Its Money?
We provide an interactive, in-depth view of the company's expenses, and earnings margins
Key for 2020: We believe that revenue will grow in mid-twenties percent on average, while expenses could grow at a slightly faster pace, resulting in the net income margin figure to decline to 23.2% fin 2018 to 21.2% in 2020. We currently forecast Zynga's 2020 EPS to be $0.32 on an adjusted basis.
(3) A Trailing P/E Multiple of 26.6x Looks Appropriate For Zynga's Stock, Which Is Higher Than The Current Implied P/E Multiple of 23.4x
We use our full discounted cash flow model for Zynga to arrive at a P/E multiple of 26.6x for a price estimate of $7.
Zynga's current P/E ratio is lower than that of Electronic Arts and Activision Blizzard's as shown in the charts below.
Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year
Zynga's P/E Ratio
Electronic Arts' P/E Ratio
Activision Blizzard's P/E Ratio
Our complete set of analyses on Zynga
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