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

Zacks Equity Research
These ETFs would be the potential movers if Facebook comes up with a positive earnings surprise.

Square (SQ) closed at $72.71 in the latest trading session, marking a -0.23% move from the prior day. This change lagged the S&P 500's 0.17% loss on the day. Meanwhile, the Dow gained 0.03%, and the Nasdaq, a tech-heavy index, lost 0.32%.

Coming into today, shares of the mobile payments services provider had gained 14.31% in the past month. In that same time, the Computer and Technology sector gained 2.43%, while the S&P 500 gained 3.07%.

Investors will be hoping for strength from SQ as it approaches its next earnings release. The company is expected to report EPS of $0.16, up 23.08% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.11 billion, up 36.4% from the year-ago period.

SQ's full-year Zacks Consensus Estimates are calling for earnings of $0.76 per share and revenue of $4.48 billion. These results would represent year-over-year changes of +61.7% and +35.79%, respectively.

Investors might also notice recent changes to analyst estimates for SQ. These recent revisions tend to reflect the evolving nature of short-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.

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. The Zacks Consensus EPS estimate has moved 0.95% higher within the past month. SQ is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, SQ is currently trading at a Forward P/E ratio of 96.33. This valuation marks a premium compared to its industry's average Forward P/E of 64.62.

It is also worth noting that SQ currently has a PEG ratio of 2.43. 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. SQ's industry had an average PEG ratio of 2.59 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 98, which puts it in the top 39% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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