Extreme Networks (EXTR) Stock Drops Despite Market Gains: Important Facts to Note

The most recent trading session ended with Extreme Networks (EXTR) standing at $12.03, reflecting a -0.66% shift from the previouse trading day's closing. This move lagged the S&P 500's daily gain of 0.51%. Meanwhile, the Dow gained 0.2%, and the Nasdaq, a tech-heavy index, added 0.58%.

The the stock of maker of network infrastructure equipment has fallen by 0.98% in the past month, lagging the Computer and Technology sector's gain of 1.47% and the S&P 500's gain of 2.94%.

The investment community will be paying close attention to the earnings performance of Extreme Networks in its upcoming release. The company is expected to report EPS of -$0.17, down 158.62% from the prior-year quarter. Alongside, our most recent consensus estimate is anticipating revenue of $207.8 million, indicating a 37.51% downward movement from the same quarter last year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $0.59 per share and revenue of $1.13 billion, indicating changes of -45.87% and -13.53%, respectively, compared to the previous year.

Investors should also pay attention to any latest changes in analyst estimates for Extreme Networks. Recent revisions tend to reflect the latest near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Extreme Networks is currently sporting a Zacks Rank of #4 (Sell).

In terms of valuation, Extreme Networks is currently trading at a Forward P/E ratio of 20.7. This represents a premium compared to its industry's average Forward P/E of 14.45.

It's also important to note that EXTR currently trades at a PEG ratio of 1.22. 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. By the end of yesterday's trading, the Computer - Networking industry had an average PEG ratio of 1.22.

The Computer - Networking industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 74, positioning it in the top 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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