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Shopify (SHOP) Gains But Lags Market: What You Should Know

Zacks Equity Research

Shopify (SHOP) closed at $922.42 in the latest trading session, marking a +1.36% move from the prior day. This change lagged the S&P 500's 1.47% gain on the day. At the same time, the Dow added 2.32%, and the tech-heavy Nasdaq gained 1.2%.

Heading into today, shares of the cloud-based commerce company had gained 22.24% over the past month, outpacing the Computer and Technology sector's gain of 4.26% and the S&P 500's gain of 0.74% in that time.

Wall Street will be looking for positivity from SHOP as it approaches its next earnings report date. On that day, SHOP is projected to report earnings of -$0.02 per share, which would represent a year-over-year decline of 114.29%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $498.22 million, up 37.64% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.51 per share and revenue of $2.16 billion, which would represent changes of +70% and +36.92%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for SHOP. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.18% higher within the past month. SHOP is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, SHOP currently has a Forward P/E ratio of 1777.05. This represents a premium compared to its industry's average Forward P/E of 30.04.

Meanwhile, SHOP's PEG ratio is currently 52.31. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Services was holding an average PEG ratio of 2.68 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 77, which puts it in the top 31% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

To follow SHOP in the coming trading sessions, be sure to utilize Zacks.com.


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