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

Zacks Equity Research

Shopify (SHOP) closed at $319.71 in the latest trading session, marking a +1.71% move from the prior day. This move outpaced the S&P 500's daily gain of 0.69%. Elsewhere, the Dow gained 0.22%, while the tech-heavy Nasdaq added 0.91%.

Coming into today, shares of the cloud-based commerce company had lost 3.28% in the past month. In that same time, the Computer and Technology sector lost 0.49%, while the S&P 500 lost 0.61%.

Wall Street will be looking for positivity from SHOP as it approaches its next earnings report date. This is expected to be October 29, 2019. On that day, SHOP is projected to report earnings of $0.11 per share, which would represent year-over-year growth of 175%. Our most recent consensus estimate is calling for quarterly revenue of $384.05 million, up 42.21% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.62 per share and revenue of $1.54 billion, which would represent changes of +63.16% and +43.46%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for SHOP. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 0.08% lower within the past month. SHOP currently has a Zacks Rank of #3 (Hold).

Digging into valuation, SHOP currently has a Forward P/E ratio of 506.09. Its industry sports an average Forward P/E of 28.08, so we one might conclude that SHOP is trading at a premium comparatively.

Also, we should mention that SHOP has a PEG ratio of 21.38. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Services industry currently had an average PEG ratio of 2.21 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 141, which puts it in the bottom 45% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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