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

Zacks Equity Research
·3 mins read

Shopify (SHOP) closed at $1,022.97 in the latest trading session, marking a -0.27% move from the prior day. This change lagged the S&P 500's daily gain of 0.83%. At the same time, the Dow added 1.2%, and the tech-heavy Nasdaq gained 0.74%.

Prior to today's trading, shares of the cloud-based commerce company had lost 9.58% over the past month. This has lagged the Computer and Technology sector's loss of 5.53% and the S&P 500's loss of 4.83% in that time.

Wall Street will be looking for positivity from SHOP as it approaches its next earnings report date. The company is expected to report EPS of $0.46, up 253.85% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $636.31 million, up 62.93% from the prior-year quarter.

SHOP's full-year Zacks Consensus Estimates are calling for earnings of $2.37 per share and revenue of $2.55 billion. These results would represent year-over-year changes of +690% and +61.66%, respectively.

Any recent changes to analyst estimates for SHOP should also be noted by investors. These revisions help to show the ever-changing nature of near-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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Over the past month, the Zacks Consensus EPS estimate has moved 1766.67% higher. SHOP currently has a Zacks Rank of #3 (Hold).

Investors should also note SHOP's current valuation metrics, including its Forward P/E ratio of 432.4. For comparison, its industry has an average Forward P/E of 37.53, which means SHOP is trading at a premium to the group.

Also, we should mention that SHOP has a PEG ratio of 13.3. 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. SHOP's industry had an average PEG ratio of 2.02 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 192, putting it in the bottom 25% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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Zacks Investment Research