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

Zacks Equity Research
Capstar Financial (CSTR) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

In the latest trading session, Square (SQ) closed at $71.58, marking a -0.83% move from the previous day. This move lagged the S&P 500's daily loss of 0.16%. Elsewhere, the Dow lost 0.07%, while the tech-heavy Nasdaq lost 0.52%.

Coming into today, shares of the mobile payments services provider had gained 8.7% in the past month. In that same time, the Computer and Technology sector gained 1.74%, while the S&P 500 gained 3.12%.

Wall Street will be looking for positivity from SQ as it approaches its next earnings report date. 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. Recent revisions tend to reflect the latest near-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. 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 0.95% higher. SQ is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that SQ has a Forward P/E ratio of 95.42 right now. This represents a premium compared to its industry's average Forward P/E of 62.84.

Investors should also note that SQ has a PEG ratio of 2.4 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Software was holding an average PEG ratio of 2.61 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 74, which puts it in the top 29% 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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