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

Zacks Equity Research
·3 mins read

Shopify (SHOP) closed the most recent trading day at $1,078.30, moving -0.35% from the previous trading session. This change lagged the S&P 500's 0.15% loss on the day. Elsewhere, the Dow lost 0.07%, while the tech-heavy Nasdaq lost 0.47%.

Prior to today's trading, shares of the cloud-based commerce company had gained 22.25% over the past month. This has outpaced the Computer and Technology sector's gain of 6.24% and the S&P 500's gain of 3.19% in that time.

SHOP will be looking to display strength as it nears its next earnings release, which is expected to be October 29, 2020. In that report, analysts expect SHOP to post earnings of $0.44 per share. This would mark year-over-year growth of 238.46%. Our most recent consensus estimate is calling for quarterly revenue of $632.64 million, up 61.99% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.33 per share and revenue of $2.54 billion. These totals would mark changes of +676.67% and +60.85%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for SHOP. Recent revisions tend to reflect the latest 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. Over the past month, the Zacks Consensus EPS estimate has moved 3.88% lower. SHOP is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, SHOP is holding a Forward P/E ratio of 464.76. This represents a premium compared to its industry's average Forward P/E of 37.34.

We can also see that SHOP currently has a PEG ratio of 14.3. 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 2.15 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 185, which puts it in the bottom 27% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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Zacks Investment Research