Duolingo, Inc.

NASDAQ Global Select
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Slightly Bullish +25

Duolingo, Inc. (DUOL) Is a Trending Stock: Facts to Know Before Betting on It

AI-generated analysis

📊 Duolingo shares gained 20% over the past month, significantly outpacing the S&P 500's 9.1% return and the Technology Services industry's 10.3% gain.

🤖 Zacks prioritizes evaluating earnings projection changes as fair value is determined by the present value of future earnings streams.

⚠️ For the current quarter, Duolingo is expected to report $0.60 EPS, reflecting a -34.1% year-over-year decline and a -5.6% revision in estimates over 30 days.

📉 The full-year consensus EPS estimate of $2.78 indicates a steep -67.6% year-over-year change with a -9.8% downward revision recently.

➡️ For the next fiscal year, estimates show growth potential with a $3.11 target (+12.1% YoY), though this figure saw an -8.1% revision in the past month.

🛑 Based on recent estimate revisions and other factors, Duolingo is assigned a Zacks Rank #3 (Hold), suggesting performance aligned with the broader market.

💰 Revenue consensus for the current quarter stands at $295.79 million (+17.3% YoY), with estimates of $1.21 billion and $1.36 billion for the current and next fiscal years respectively.

✅ Actual reported revenues of $291.97 million in the last quarter beat consensus by 1.19%, with EPS of $0.89 beating estimates by 12.66%.

🏆 Duolingo has beaten both consensus EPS and revenue estimates for each of the trailing four quarters, demonstrating a consistent track record.

📈 Historical comparison shows Duolingo revenues grew +26.5% year-over-year in the last reported quarter compared to $0.72 EPS a year ago.

⚖️ Valuation analysis using the Zacks Value Style Score grades Duolingo as 'C', indicating the stock is trading at par with its peers on traditional and unconventional metrics.

🔮 The combination of a Hold ranking and peer-relative valuation suggests investors should monitor market buzz while noting potential near-term neutral performance.

Bullish Signals
  • Duolingo has outperformed the broader market recently, with shares returning +20% in the past month compared to the Zacks S&P 500 composite's +9.1% gain.
  • The company reported quarterly revenues of $291.97 million, representing a strong year-over-year growth of +26.5%.
  • Duolingo has demonstrated consistency by beating both consensus EPS estimates and revenue estimates in each of the trailing four quarters.
  • Revenue growth is projected to continue at double-digits, with consensus estimates indicating +17.3% growth for the current quarter and +16.4% for the full fiscal year.
  • The stock recently surpassed quarterly expectations by +1.19% in revenue and +12.66% in EPS, highlighting strong execution against analyst predictions.
Risk Factors
  • Duolingo's current quarter earnings are expected to decline by 34.1% year-over-year to $0.60 per share, indicating near-term profitability pressures.
  • The consensus earnings estimate for the current fiscal year is projected to drop significantly by 67.6% year-over-year to $2.78.
  • Over the last month, sell-side analysts have revised down Duolingo's full-year and next fiscal year earnings estimates by -9.8% and -8.1%, respectively.
  • The stock is assigned a Zacks Rank #3 (Hold), suggesting it may perform merely in line with the broader market rather than outperforming.
  • Duolingo received a C grade on its Value Style Score, implying it is trading at fair value relative to peers without any discernible undervaluation advantage.
  • Despite recent revenue beats, the fundamental earnings outlook remains deteriorating with downward revisions persisting over the last month.
Full Analysis
Duolingo, Inc. (DUOL) shares have recently outperformed the broader market, gaining 20% over the past month compared to the S&P 500's +9.1% increase, driven by strong interest in the education technology sector which has risen 10.3%. While short-term price movements are often influenced by media rumors, the fundamental valuation relies heavily on earnings projection revisions; analysts track these estimates to determine fair value, where a rise in future earnings expectations typically correlates with higher stock prices and increased investor interest. Current analyst consensus suggests that Duolingo is expected to report quarterly earnings of $0.60 per share, representing a year-over-year decline of 34.1%, following a broader downward trend in the one-month earnings estimate change of -5.6%. Looking further ahead, the full fiscal year consensus stands at $2.78, down 67.6% from last year, while next year's forecast is projected to reach $3.11, indicating a potential recovery with 12.1% growth compared to the prior year despite recent estimate revisions showing minor negative shifts. Revenue analysis indicates healthier growth than earnings projections suggest for the immediate term, with consensus estimates of $295.79 million for the current quarter reflecting a 17.3% year-over-year increase, and full fiscal year expectations set at $1.21 billion with an estimated 16.4% annual growth. The company has demonstrated a history of beating both earnings and revenue consensus estimates in each of the last four quarters, having recently reported revenues of $291.97 million that surpassed the forecast by +1.19%, though valuation metrics grade it as 'C' for being trading at par with peers. Based on the size of the recent negative change in earnings estimates alongside these other factors, Duolingo currently carries a Zacks Rank #3 (Hold), suggesting the stock is expected to perform in line with the broader market over the near term rather than seeing significant upside or downside pressure without further catalysts.