Zynga, Inc. – Value Analysis (NASDAQ:ZNGA) : November 9, 2017

Capitalcube gives Zynga, Inc. a score of 22.

Our analysis is based on comparing Zynga, Inc. with the following peers – Glu Mobile Inc., Activision Blizzard, Inc., Electronic Arts Inc., Alphabet Inc. Class A, Facebook, Inc. Class A, Apple Inc., PolarityTE, Inc., Gravity Co., Ltd. Sponsored ADR, Changyou.com Ltd. Sponsored ADR Class A and NetEase, Inc. Sponsored ADR (GLUU-US, ATVI-US, EA-US, GOOGL-US, FB-US, AAPL-US, COOL-US, GRVY-US, CYOU-US and NTES-US).

Investment Outlook

Zynga, Inc. has a fundamental score of 22 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It trades at a lower Price/Book multiple (1.82) than its peer median (6.01).
  • ZNGA-US‘s EBITDA-based price implies better than peer median growth.The market seems to expect a turnaround in the company’s current EBITDA-based return on equity.
  • ZNGA-US‘s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • Changes in annual earnings are in line with its chosen peers but lags in terms of revenue, implying the company is cost conscious and selective about spending for growth.
  • ZNGA-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While ZNGA-US‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median Price/EBITDA ratio and may be factoring in some sort of a strategic play.
  • The company’s relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode.
  • ZNGA-US currently does not have any debt.

Access our research and ratings on Zynga, Inc.

Leverage & Liquidity

ZNGA-US currently does not have any debt.

  • We consider the company to have a Quick & Able profile as it currently does not have any debt. In comparison, the median level of debt as percent of enterprise value for its peer group is currently 0%.
  • Of the 10 chosen peers for the company, only 5 of the stocks have an outstanding debt balance. Companies with no debt include GLUU-US, FB-US, COOL-US, GRVY-US and CYOU-US.

Access the detailed analysis for Zynga, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Glu Mobile Inc. 0 1.09 -24802 999
Activision Blizzard, Inc. 17.11 2.25 9.64 60.67
Electronic Arts Inc. 4.11 2.38 31.51 167.61
Alphabet Inc. Class A 0.68 5.77 201.65 902.66
Facebook, Inc. Class A 0 13.37 No interest exp 999
Apple Inc. N/A 1.28 26.41 68.22
PolarityTE, Inc. 0 2.43 No interest exp 999
Gravity Co., Ltd. Sponsored ADR 0 2.48 1441.13 999
Changyou.com Ltd. Sponsored ADR Class A 0 2.97 30.28 41.25
NetEase, Inc. Sponsored ADR 2.37 2.85 0 302.87
Zynga Inc. Class A 0 3.72 No interest exp 999
Peer Median 0 2.48 116.58 902.66
Best In Class 0.68 13.37 1441.13 999

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Company Profile

Zynga, Inc. provides social game services. It develops, markets and operates social games as live services played on mobile platforms such as Apple’s iOS operating system and Google’s Android operating system, and social networking sites such as Facebook. It offers Chess with Friends, Crazy Cake Swap, Draw Something, FarmVille, Gems With Friends, Ice Age: Arctic Blast, Looney Tunes Dash, Speed Guess Something, What’s The Phrase, Wizard of Oz Magic Match, Yummy Gummy, Free Slots, Black Diamond Casino, Hit It Rich, Zynga Poker and Willy Wonka Slots. The company was founded by Mark Jonathan Pincus on April 19, 2007 and is headquartered in San Francisco, CA.

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