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Shopify (SHOP) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 mins read

In the latest trading session, Shopify (SHOP) closed at $870.76, marking a -1.63% move from the previous day. This change lagged the S&P 500's daily loss of 0.84%. Meanwhile, the Dow lost 0.47%, and the Nasdaq, a tech-heavy index, lost 1.27%.

Heading into today, shares of the cloud-based commerce company had lost 12.28% over the past month, lagging the Computer and Technology sector's gain of 0.69% and the S&P 500's gain of 0.6% in that time.

SHOP will be looking to display strength as it nears its next earnings release. In that report, analysts expect SHOP to post earnings of $0.46 per share. This would mark year-over-year growth of 253.85%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $634.63 million, up 62.5% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.37 per share and revenue of $2.55 billion, which would represent changes of +690% and +61.51%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for SHOP. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 1748.72% higher. SHOP is currently sporting a Zacks Rank of #2 (Buy).

Digging into valuation, SHOP currently has a Forward P/E ratio of 373.91. This represents a premium compared to its industry's average Forward P/E of 38.62.

We can also see that SHOP currently has a PEG ratio of 11.5. 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. The Internet - Services was holding an average PEG ratio of 2.07 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 184, which puts it in the bottom 28% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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