Shopify (SHOP) Stock Sinks As Market Gains: What You Should Know

·3-min read

In the latest trading session, Shopify (SHOP) closed at $1,478.99, marking a -1.44% move from the previous day. This change lagged the S&P 500's 0.58% gain on the day.

Coming into today, shares of the cloud-based commerce company had gained 21.13% in the past month. In that same time, the Computer and Technology sector gained 7.24%, while the S&P 500 gained 2.17%.

Wall Street will be looking for positivity from SHOP as it approaches its next earnings report date. In that report, analysts expect SHOP to post earnings of $0.97 per share. This would mark a year-over-year decline of 7.62%. Our most recent consensus estimate is calling for quarterly revenue of $1.03 billion, up 43.98% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.25 per share and revenue of $4.36 billion. These totals would mark changes of +6.78% and +48.69%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for SHOP. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Within the past 30 days, our consensus EPS projection remained stagnant. SHOP is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that SHOP has a Forward P/E ratio of 353 right now. Its industry sports an average Forward P/E of 28.94, so we one might conclude that SHOP is trading at a premium comparatively.

Meanwhile, SHOP's PEG ratio is currently 14.12. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SHOP's industry had an average PEG ratio of 2.07 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 192, which puts it in the bottom 25% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

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


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