Spotify (SPOT) closed at $599.86 in the latest trading session, marking a -1.34% move from the prior day. The stock outperformed the S&P 500, which registered a daily loss of 1.76%. On the other hand, the Dow registered a loss of 1.48%, and the technology-centric Nasdaq decreased by 2.64%.

Shares of the music-streaming service operator witnessed a gain of 10.84% over the previous month, beating the performance of the Business Services sector with its gain of 1.16% and the S&P 500's loss of 1.26%.

The investment community will be paying close attention to the earnings performance of Spotify in its upcoming release. In that report, analysts expect Spotify to post earnings of $2.31 per share. This would mark year-over-year growth of 120%. In the meantime, our current consensus estimate forecasts the revenue to be $4.38 billion, indicating a 10.84% growth compared to the corresponding quarter of the prior year.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $10.30 per share and a revenue of $18.83 billion, representing changes of +73.11% and +11.05%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Spotify. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional 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. Over the last 30 days, the Zacks Consensus EPS estimate has moved 17.1% higher. Spotify presently features a Zacks Rank of #3 (Hold).

Looking at its valuation, Spotify is holding a Forward P/E ratio of 59.04. For comparison, its industry has an average Forward P/E of 22.23, which means Spotify is trading at a premium to the group.

The Technology Services industry is part of the Business Services sector. With its current Zacks Industry Rank of 76, this industry ranks in the top 31% of all industries, numbering over 250.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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