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Square (SQ) Dips More Than Broader Markets: What You Should Know

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·3 min read
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Square (SQ) closed the most recent trading day at $216.43, moving -7.25% from the previous trading session. This move lagged the S&P 500's daily loss of 1.04%.

Coming into today, shares of the mobile payments services provider had lost 9.68% in the past month. In that same time, the Computer and Technology sector gained 3.67%, while the S&P 500 gained 3.83%.

In that report, analysts expect SQ to post earnings of $0.27 per share. This would mark year-over-year growth of 50%. Our most recent consensus estimate is calling for quarterly revenue of $3.52 billion, up 83.05% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.18 per share and revenue of $14.42 billion. These totals would mark changes of +40.48% and +51.79%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for SQ. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 6.32% higher. SQ is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that SQ has a Forward P/E ratio of 197.53 right now. This represents a premium compared to its industry's average Forward P/E of 65.78.

It is also worth noting that SQ currently has a PEG ratio of 5.9. 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 - Software stocks are, on average, holding a PEG ratio of 3.88 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 205, putting it in the bottom 20% 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.

To follow SQ in the coming trading sessions, be sure to utilize Zacks.com.


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