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

Zacks Equity Research

Shopify (SHOP) closed at $469.01 in the latest trading session, marking a +0.91% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.11%. Meanwhile, the Dow lost 0.09%, and the Nasdaq, a tech-heavy index, added 0.2%.

Coming into today, shares of the cloud-based commerce company had gained 16.37% in the past month. In that same time, the Computer and Technology sector gained 6.56%, while the S&P 500 gained 3.25%.

Wall Street will be looking for positivity from SHOP as it approaches its next earnings report date. This is expected to be February 12, 2020. On that day, SHOP is projected to report earnings of $0.24 per share, which would represent a year-over-year decline of 7.69%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $481.99 million, up 40.17% from the year-ago period.

Investors might also notice recent changes to analyst estimates for SHOP. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. 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, 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. Within the past 30 days, our consensus EPS projection has moved 0.62% higher. SHOP currently has a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that SHOP has a Forward P/E ratio of 519.28 right now. Its industry sports an average Forward P/E of 27.72, so we one might conclude that SHOP is trading at a premium comparatively.

Investors should also note that SHOP has a PEG ratio of 20.77 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 2.29 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 157, which puts it in the bottom 39% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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