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

Zacks Equity Research

Shopify (SHOP) closed the most recent trading day at $453.45, moving +1.1% from the previous trading session. This change outpaced the S&P 500's 0.84% gain on the day. Meanwhile, the Dow gained 0.92%, and the Nasdaq, a tech-heavy index, added 1.06%.

Coming into today, shares of the cloud-based commerce company had gained 12.99% in the past month. In that same time, the Computer and Technology sector gained 6.54%, while the S&P 500 gained 3.95%.

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 $0.25 per share, which would represent a year-over-year decline of 3.85%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $484.22 million, up 40.82% from the year-ago period.

It is also important to note the 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. The Zacks Consensus EPS estimate remained stagnant within the past month. SHOP is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, SHOP currently has a Forward P/E ratio of 524.14. Its industry sports an average Forward P/E of 27.8, so we one might conclude that SHOP is trading at a premium comparatively.

Also, we should mention that SHOP has a PEG ratio of 20.97. 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. Internet - Services stocks are, on average, holding a PEG ratio of 2.58 based on yesterday's closing prices.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 178, putting it in the bottom 31% 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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