The Zacks Internet – Software Industry has mightily struggled year-to-date, declining nearly 46% in value. However, the industry has posted a solid 6.6% return over the last month. Below is a table illustrating the industry’s performance vs. the S&P 500 over several timeframes.

Image Source: Zacks Investment Research

A big-time player in the industry, Unity Software (U Quick QuoteU - Free Report) , is on deck to release Q2 2022 results after the market close on Tuesday, August 9, 2022.

Unity Software provides a world-leading platform for creating and operating interactive, real-time 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. The company executed its IPO on September 17^th, 2020.

In addition, the company carries a Zacks Rank #3 (Hold) with an overall VGM Score of a D. How does the software titan stack up heading into the print? Let’s take a closer look and find out.

Share Performance & Valuation

It’s undoubtedly been a rough stretch year-to-date for Unity Software shares, down more than 60% and vastly underperforming the general market.

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However, over the past month, when investors have favored a higher risk-to-reward ratio amid a somewhat clearer economic outlook, Unity Software shares have soared an impressive 22%.

Image Source: Zacks Investment Research

Unity Software shares trade at steep valuation levels – the company’s 10.6X forward price-to-sales ratio is undoubtedly on the high side, representing a steep 352% premium relative to its Zacks Internet – Software industry.

Unity carries a Value Style Score of an F.

Image Source: Zacks Investment Research

Quarterly Estimates

Analysts have been bullish for the quarter to be reported, with four positive estimate revisions coming in over the last 60 days. However, the Zacks Consensus EPS Estimate resides at -$0.20, reflecting a 900% year-over-year decline in earnings.

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However, the company’s top-line is in much better shape – Unity Software is projected to have generated $296 million in revenue throughout the quarter, good enough for a solid 8.3% uptick from year-ago quarterly sales of $273 million.

Quarterly Performance & Market Reactions

U has primarily reported bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in five of its seven quarterly reports. Just in its latest print, the company reported EPS in line with expectations.

Top-line results have also been solid – the company has recorded six revenue beats over its seven quarterly reports. Below is a chart illustrating the company’s revenue on a quarterly basis.

Image Source: Zacks Investment Research

The market has primarily reacted well to Unity’s quarterly reports, with shares moving upwards in four of its last five prints. However, the one adverse reaction occurred following its latest earnings release, with shares plummeting nearly 40%.

Putting Everything Together

Unity Software shares reside deep in the red year-to-date, but buyers have appeared over the last month, increasing the stock price significantly. In addition, shares trade at high valuation multiples, and the company has a Style Score of an F for Value.

Analysts have been bullish for the quarter to be reported, and quarterly estimates reflect a declining bottom-line but an increasing top-line.

Furthermore, the company has primarily reported quarterly results above expectations, but shares plummeted following its latest earnings release. Prior to the previous quarter, the market had reacted well to each of the last four quarterly reports.

Heading into the print, Unity Software (U Quick QuoteU - Free Report) carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of 7.6%.