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

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Square (SQ) closed at $74.49 in the latest trading session, marking a -0.8% move from the prior day. This change lagged the S&P 500's 0.08% loss on the day. Meanwhile, the Dow gained 0.06%, and the Nasdaq, a tech-heavy index, lost 0.07%.

Coming into today, shares of the mobile payments services provider had gained 0.89% in the past month. In that same time, the Computer and Technology sector gained 3.22%, while the S&P 500 gained 0.52%.

SQ will be looking to display strength as it nears its next earnings release. On that day, SQ is projected to report earnings of $0.08 per share, which would represent year-over-year growth of 33.33%. Our most recent consensus estimate is calling for quarterly revenue of $937.63 million, up 40.24% from the year-ago period.

SQ's full-year Zacks Consensus Estimates are calling for earnings of $0.74 per share and revenue of $4.41 billion. These results would represent year-over-year changes of +57.45% and +33.7%, respectively.

It is also important to note the recent changes to analyst estimates for SQ. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Within the past 30 days, our consensus EPS projection has moved 74.6% higher. SQ is currently a Zacks Rank #2 (Buy).

In terms of valuation, SQ is currently trading at a Forward P/E ratio of 101.82. For comparison, its industry has an average Forward P/E of 56.44, which means SQ is trading at a premium to the group.

Meanwhile, SQ's PEG ratio is currently 4.07. 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. SQ's industry had an average PEG ratio of 3.31 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 55, which puts it in the top 22% 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.

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


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