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Square (SQ) Gains As Market Dips: What You Should Know

Zacks Equity Research

Square (SQ) closed the most recent trading day at $58.32, moving +0.92% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.07%. Meanwhile, the Dow gained 0.14%, and the Nasdaq, a tech-heavy index, lost 0.22%.

Heading into today, shares of the mobile payments services provider had lost 6.79% over the past month, lagging the Computer and Technology sector's gain of 5.05% and the S&P 500's gain of 4.58% in that time.

Investors will be hoping for strength from SQ as it approaches its next earnings release. The company is expected to report EPS of $0.03, up 190.91% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.19 billion, up 35.37% from the year-ago period.

SQ's full-year Zacks Consensus Estimates are calling for earnings of $0.12 per share and revenue of $4.55 billion. These results would represent year-over-year changes of +488.46% and +37.86%, respectively.

Any recent changes to analyst estimates for SQ should also be noted by investors. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 remained stagnant within the past month. SQ is currently a Zacks Rank #3 (Hold).

Digging into valuation, SQ currently has a Forward P/E ratio of 75.3. Its industry sports an average Forward P/E of 59.57, so we one might conclude that SQ is trading at a premium comparatively.

Also, we should mention that SQ has a PEG ratio of 3.01. 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 industry currently had an average PEG ratio of 2.83 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 93, which puts it in the top 37% 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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