Shopify (SHOP) Stock Sinks As Market Gains: What You Should Know
Shopify (SHOP) closed the most recent trading day at $1,363.14, moving -1.03% from the previous trading session. This move lagged the S&P 500's daily gain of 0.64%. Meanwhile, the Dow gained 0.68%, and the Nasdaq, a tech-heavy index, added 0.46%.
Heading into today, shares of the cloud-based commerce company had lost 2.31% over the past month, lagging the Computer and Technology sector's gain of 1.46% and the S&P 500's gain of 4.56% in that time.
Shopify will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.14, down 27.85% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.35 billion, up 38.14% from the year-ago period.
It is also important to note the recent changes to analyst estimates for Shopify. 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.
Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.
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 remained stagnant. Shopify is currently sporting a Zacks Rank of #3 (Hold).
Looking at its valuation, Shopify is holding a Forward P/E ratio of 215.41. This represents a premium compared to its industry's average Forward P/E of 26.72.
It is also worth noting that SHOP currently has a PEG ratio of 6.69. 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. The Internet - Services was holding an average PEG ratio of 3.53 at yesterday's closing price.
The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 202, which puts it in the bottom 21% 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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