The Zacks Consumer Discretionary sector has struggled to find its footing in 2022, down more than 35% and widely lagging behind the S&P 500.
A company residing in the realm, DraftKings Inc. DKNG, is on deck to unveil Q3 earnings on November 4th, before the market open.
DraftKings is a multi-channel provider of sports betting and gaming technologies, powering sports and gaming entertainment for 50 operators across more than 15 regulated U.S. and global markets.
Currently, the gaming giant carries a Zacks Rank #3 (Hold) with an overall VGM Score of a D.
How does everything else stack up? Let’s take a closer look.
Share Performance & Valuation
DKNG shares have sailed through rough waters in 2022, down more than 40% and widely underperforming the S&P 500.
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However, over the last three months, the selling has visibly slowed, with DKNG shares losing roughly 4% in value and outperforming the S&P 500 by a fair margin.
Image Source: Zacks Investment Research
While the year-to-date performance is disheartening, the more recent price action of DKNG shares indicates that buyers have finally started to step up to the plate.
Shares trade at a 6.2X forward price-to-sales ratio, well below its 17.8X median since its IPO in the first half of 2020. Relative to its Zacks Consumer Discretionary sector, shares trade at a 332% premium.
DKNG carries a Value Style Score of an F.
Image Source: Zacks Investment Research
Quarterly Estimates
Analysts have had mixed reactions to the quarter to be reported over the last several months, with two upward and two downward earnings estimate revisions. Still, the Zacks Consensus EPS Estimate of -$1.07 suggests Y/Y earnings growth of more than 20%.
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DKNG’s top-line estimates are rock-solid; the Zacks Consensus Sales Estimate of $436.2 million indicates an improvement of more than 100% from year-ago quarterly sales of $212.8 million.
Quarterly Performance & Market Reactions
DraftKings has posted strong quarterly results as of late, exceeding both revenue and earnings estimates in three consecutive quarters.
Just in its latest print, the gaming giant penciled in a sizable 42% EPS beat paired with a 6.4% sales surprise. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Expect shares to be volatile in response to the release; following its latest print, shares soared roughly 10%. Following the earnings release before that, shares embarked on a steep downward trajectory.
Putting Everything Together
DKNG shares are deep in the red year-to-date but have outperformed the general market by a fair margin over the last three months, indicating that buyers have arrived.
The company’s valuation multiples are nowhere near historical values but are well above that of its Zacks Consumer Discretionary sector. Further, the company carries a Value Style Score of an F.
Analysts have had mixed reactions regarding their earnings outlook, with estimates suggesting strong Y/Y upticks in both revenue and earnings.
The company is on a solid streak of exceeding quarterly estimates, with shares seeing large price swings following the release of its last two prints.
Heading into the release, DraftKings DKNG carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of -6.8%.
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