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

Zacks Equity Research

Shopify (SHOP) closed at $311.66 in the latest trading session, marking a +1.95% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.51%. Meanwhile, the Dow gained 0.36%, and the Nasdaq, a tech-heavy index, added 0.75%.

Prior to today's trading, shares of the cloud-based commerce company had lost 21.96% over the past month. This has lagged the Computer and Technology sector's gain of 2.59% and the S&P 500's gain of 3.44% in that time.

Investors will be hoping for strength from SHOP as it approaches its next earnings release. On that day, SHOP is projected to report earnings of $0.05 per share, which would represent year-over-year growth of 25%. Our most recent consensus estimate is calling for quarterly revenue of $384.07 million, up 42.22% from the year-ago period.

SHOP's full-year Zacks Consensus Estimates are calling for earnings of $0.62 per share and revenue of $1.54 billion. These results would represent year-over-year changes of +63.16% and +43.46%, respectively.

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.

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.

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. The Zacks Consensus EPS estimate has moved 0.17% higher within the past month. SHOP is currently a Zacks Rank #3 (Hold).

Investors should also note SHOP's current valuation metrics, including its Forward P/E ratio of 492.29. This represents a premium compared to its industry's average Forward P/E of 26.06.

Also, we should mention that SHOP has a PEG ratio of 20.8. 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. SHOP's industry had an average PEG ratio of 2.46 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 159, putting it in the bottom 38% 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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