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Square (SQ) Gains But Lags Market: What You Should Know

Zacks Equity Research

Square (SQ) closed the most recent trading day at $67.92, moving +0.47% from the previous trading session. This move lagged the S&P 500's daily gain of 0.67%. At the same time, the Dow added 0.74%, and the tech-heavy Nasdaq gained 0.81%.

Coming into today, shares of the mobile payments services provider had gained 2.81% in the past month. In that same time, the Computer and Technology sector gained 6.02%, while the S&P 500 gained 3.55%.

Investors will be hoping for strength from SQ as it approaches its next earnings release. In that report, analysts expect SQ to post earnings of $0.21 per share. This would mark year-over-year growth of 50%. Our most recent consensus estimate is calling for quarterly revenue of $1.18 billion, up 27.01% from the year-ago period.

Any recent changes to analyst estimates for SQ should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

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. The Zacks Consensus EPS estimate has moved 6.93% higher within the past month. SQ is currently a Zacks Rank #3 (Hold).

Digging into valuation, SQ currently has a Forward P/E ratio of 71.16. Its industry sports an average Forward P/E of 55.13, so we one might conclude that SQ is trading at a premium comparatively.

Also, we should mention that SQ has a PEG ratio of 2.15. 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. The Internet - Software industry currently had an average PEG ratio of 2.47 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 105, which puts it in the top 42% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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