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

Zacks Equity Research

Shopify (SHOP) closed at $331.24 in the latest trading session, marking a +1.82% move from the prior day. This move outpaced the S&P 500's daily gain of 0.36%. Meanwhile, the Dow gained 0.01%, and the Nasdaq, a tech-heavy index, added 0.27%.

Coming into today, shares of the cloud-based commerce company had lost 0.52% in the past month. In that same time, the Computer and Technology sector gained 4.78%, while the S&P 500 gained 3.98%.

Investors will be hoping for strength from SHOP as it approaches its next earnings release, which is expected to be August 1, 2019. In that report, analysts expect SHOP to post earnings of $0.03 per share. This would mark year-over-year growth of 50%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $350.58 million, up 43.12% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.58 per share and revenue of $1.51 billion. These totals would mark changes of +52.63% and +40.79%, respectively, from last year.

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

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 2.91% higher. SHOP is currently sporting a Zacks Rank of #4 (Sell).

In terms of valuation, SHOP is currently trading at a Forward P/E ratio of 563.33. This valuation marks a premium compared to its industry's average Forward P/E of 28.43.

Investors should also note that SHOP has a PEG ratio of 23.8 right now. 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 2.79 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 145, putting it in the bottom 44% 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.

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


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