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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 $908.61 in the latest trading session, marking a -1.11% move from the prior day. This move lagged the S&P 500's daily gain of 0.3%. Elsewhere, the Dow gained 0.2%, while the tech-heavy Nasdaq added 0.37%.

Prior to today's trading, shares of the cloud-based commerce company had lost 15.65% over the past month. This has lagged the Computer and Technology sector's loss of 5.52% and the S&P 500's loss of 5.02% in that time.

Wall Street will be looking for positivity from SHOP as it approaches its next earnings report date. On that day, SHOP is projected to report earnings of $0.46 per share, which would represent year-over-year growth of 253.85%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $636.31 million, up 62.93% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.37 per share and revenue of $2.55 billion. These totals would mark changes of +690% and +61.66%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for SHOP. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

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. Within the past 30 days, our consensus EPS projection has moved 1766.67% higher. SHOP is currently a Zacks Rank #2 (Buy).

Investors should also note SHOP's current valuation metrics, including its Forward P/E ratio of 387.34. Its industry sports an average Forward P/E of 38.64, so we one might conclude that SHOP is trading at a premium comparatively.

Investors should also note that SHOP has a PEG ratio of 11.92 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 1.95 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 185, which puts it in the bottom 28% 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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